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How far back does a car insurance company look?

Here's what you need to know...

  • Insurance companies underwrite all applications to assess risk and calculate rates
  • During underwriting, the underwriter will run a motor vehicle report to look for minor and serious convictions
  • Minor violations for infractions like failure to stop and speeding can only be surcharged for 36 months
  • Serious violations for reckless driving or Driving Under the Influence can go into rate calculations for between 3 and 7 years
  • Insurance companies will also review your claims history through an agency like C.L.U.E and may surcharge you for chargeable claims in the past 3 years

Insurance companies don’t just take on risk blindly. Instead, they employ underwriting forces that review guidelines and actuaries who crunch all of the numbers and file rates. The purpose of underwriting in today’s modern age is to review the answers that an applicant has provided and to compare back these answers to the what’s displayed on the reports that they run. If they discover that the applicant was dishonest or failed to disclose something of value to their agent, the underwriter will either update the premium or deny the application all together. Compare rates now by using our FREE tool above!

Insurance companies look at driving records and other history reports so that they can paint a picture representing how responsible you are behind the wheel. While the company would probably love to look back to when you were licensed, they can’t legally do so. In most states, there are limits to how long violations and accidents can stay on a record or be classified as chargeable. Read on, and learn more about the reports that insurers run and how long blemishes might affect your premiums.

Why do insurance companies care about moving violations?

It’s only natural to assume that an insurer will only raise your rates when you cost the company money, but in the world of auto insurance, that’s not the case. If you get a traffic ticket, it might not cost the insurer money, but it does affect your risk class as a policyholder.

Getting a traffic ticket shows the insurer that you don’t obey traffic laws that are set to prevent preventable and devastating crashes.

Since your real-world probability of getting into an accident rises when you have one or more violations in the recent years, driving infractions will impact your rates.

How do insurance companies check for violations?

When you begin to shop for insurance, you’re agreeing that any company that you apply to can run specific reports. Once of these reports is a Motor Vehicle Report in the state where you’re licensed. Companies only run the MVR through agencies like LexisNexis when you’re committing to the application process because taking a peek at your driving abstract doesn’t come cheap. When you first submit your application, the company will spend up to $27 just to pull your report and see if you have minor or serious violations.

How long will violations affect your eligibility and rates?

If a driver in your household has been cited for a moving violation, it’s important that you know time frames and when the insurer can see these. You don’t want to purposely fail to disclose a violation in hopes that it won’t be seen. Doing this is called material misrepresentation and it can lead to claims denials, policy cancelations, or at the least a misquote.

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How long certain violations can be seen depends upon the type of violation that you’re cited for. The state that you live in might also have their own special laws surrounding how long serious violations stay on your record. Here’s a breakdown of the most common time frames:

  • Minor Violations- Speeding, failure to stop, improper turn, improper pass, following too closely and failure to yield are all examples of minor traffic infractions. These infractions will only stay on your record for 3 years in most states. At the renewal following the 3rd year anniversary of your conviction, the surcharge that raises your rates will fall off.
  • Major Violations- Leaving the scene of an accident, driving under the influence, reckless driving, and refusing to stop for an officer are all examples of major infractions. Time frames for major violations are a bit different because they tend to be criminal, and this is why the period they affect your rates can vary by state. In most states, the violations can affect rates and eligibility for between 3 and 7 years depending on the nature of the offense.

How much will a violation affect your rates?

While an infraction is chargeable it can drive up your rates and even disqualify you from receiving a Good Driver or Safe Driver discount. How much a violation impacts your rates depends on the type and the company. Companies have conducted studies to see how much weight is placed on violations. Here’s how much the study found surcharges to be:

  • Reckless driving – 22 percent
  • Failure to stop – 15 percent
  • Improper turn – 14 percent
  • Failure to yield – 9 percent
  • Improper pass – 14 percent
  • DUI – 19 percent

What happens if you don’t disclose a violation?

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If you’ve failed to disclose a violation on your application, the underwriter will reevaluate rates and eligibility before issuing your policy. If you have a major infraction that leads to disqualification, you’ll receive a notice. If the change just increases your rates, you’ll be given the option to proceed with issuance or to cancel your application.

 

How do insurance companies look at claims?

Not only do companies look at your driving record, the underwriter will also run reports to look at your claims history with other carriers. Believe it or not, insurance companies communicate with one another to help with application evaluation.

Each company reports to the Comprehensive Loss Underwriting Exchange to report when a consumer files an auto claim.

The C.L.U.E. report will typically provide the company with 7 years of personal auto claims history so that they can make underwriting decisions. How long the claims are used for rate calculations will depend, but in most cases at-fault claims are only surcharged for 3 years.

How does credit affect auto insurance?

In all but a few states, credit can affect your personal auto insurance rating. This is why companies run your FICO report or another related report to get a credit insurance score when you apply. This report looks back into your credit history to show how you pay your bills, how much debt you have and how recently you’ve applied for credit. In most cases, information from the past 7 years is used.

It’s important that you also review how your blemishes can affect your eligibility for discounts. If you’d like to price the cost of coverage to see how your past actions will affect your rates with a handful of insurers, use an online rate comparison tool and start shopping. By providing all of the infraction details and demographic information just once, you can get dozens of quotes. Start comparing car insurance rates now by entering your zip code in our FREE tool below!

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