Why Your Claims History is Important to Insurers

Some people seem to get into tricky situations more than others. When it comes to automobile insurance policies, there are many variables that car insurance carriers used to determine the rates a person pays. By utilizing statistics, car insurance providers are more likely to stay financially strong and be better able to provide for their policyholders. Some of the factors that are used to determine car insurance rates include the area a person lives in, their age, their gender, the type of vehicle they are driving, their driving history, and in some cases, the number and type of automobile insurance claims a person has made.

Many people are curious as to why car insurance companies are paying attention to a person’s claim history. Why does your claims history affect your car insurance rates? The answers to these questions are important to know, especially if you are looking to file a claim. In some cases, filing a claim can end up costing you more overall in higher auto insurance premiums than paying for an accident out-of-pocket. These variables need to be weighed before each and every claim you are thinking about filing.

More Claims Means Higher Costs For Car Insurance Companies

Auto insurance companies have some restrictions on what they can use when determining a person’s car insurance rates. To get the best car insurance prices, you should be aware of the variables that you can have effect on. Some variables, such as age, are ones that you cannot change or improve. Others, like your driving record and the type of vehicle you drive, can be directly impacted by your choices.

While things like race, and in some states credit history, cannot used to determine auto insurance rates by law, there are other factors that companies utilize. The crime rate and the area a vehicle is garaged can be used, as can the number of claims a driver has made to car insurance companies in the past. Auto insurance companies are allowed to utilize your claims history to determine if you are a bad driver or a good driver. People who have a tendency to make a lot of claims are determined to be more likely to make claims in the future, therefore potentially costing a car insurance carrier more money if they give you a policy.

Drivers who have a clean claims history are more likely to be safer drivers, according to statistics. If a person has never made a claim for vandalism, accidents, collisions, hail, theft, or other things that are covered by their insurance policy, they are less likely to make claims in the future. People who have made multiple claims in the past few years are more likely to make another claim in the future. Auto insurance companies utilize statistics to determine rates, and this particular statistic can give them a lot of information.

How Do Insurance Companies Know About Your Previous Claims?

There is a report that auto insurance companies use to track claims that is called the CLUE Report. This report allows providers to look up claims that are made across different insurance providers. A database that has been set up by LexisNexis, C.L.U.E., which stands for Comprehensive Loss Underwriting Exchange, is a commonly used tool that contains your loss history. Your file will contain your name, address, date of birth, Social Security number, and claims history. It will also include inquiries that you have made. Reports made in the database stay there for seven years, and are deleted after this period in most cases.

All auto insurance companies utilize your insurance score, which also comes with your CLUE report. This helps them protect themselves by giving the information they need to charge you for your insurance plan.

What Happens If You Have No Claims History?

Sometimes people have no claims history at all, in particular, younger drivers. People who have just gotten her driver’s license will have no claims history on record. In most cases, insurance providers tend to be more cautious with people who have no claims history record. This will generally mean higher rates overall.

Auto insurance carriers have no real way of knowing whether you are an incredibly safe driver or not. To put together free car insurance quotes for you, they use the information they have and compare it to the related statistics. Since each insurance service uses different formulas, you can find auto insurance at different rates from different companies. Use the tools at General Insurance to find the best car insurance prices available for your particular situation. Here, you can get quotes from multiple companies and look at details for many policies. Take advantage of the money-saving opportunities on this website, and keep more cash in your wallet.