When you apply for coverage with an insurance company, your application
is subject to an underwriting review. They look at all sorts of information,
how far you drive to work one way, job stability, ages and driving records
drivers in your household, loss history, etc. Did you know they also look
credit report? One of the newest underwriting tools is doing a credit
profile is scored based on an unknown criteria, unknown not only to me,
but to most
individual underwriters involved in using this method. The underwriter
your credit report, they only see the score that your credit report generates.
don't even know how the score is calculated! Many times your score will
if a policy is issued. The industry has proven over the years that people
with a good
credit history will generally be a better risk, regardless of driving
method has been used in Europe for years and has proven successful.
In addition, most applicants do not realize that all the information
claims filed with your prior insurance carriers is available to the new
company through various private reporting agencies. Most major insurance
companies subscribe to these services for a fee. Insurance companies supply
reporting company with data about your claims history, then when you attempt
change companies, the new company can order a report to review your claims
history. It works like a credit bureau, only rather than credit history
it's your claims history. It's not a bad system and helps keep people
As in everything, mistakes are made. It is in your best interest to keep
own file on your claims history. The reason for this is just as credit
mistakes, so do these reporting agencies. An accurate claims history could
invaluable to you if you attempt to change insurance companies and are
coverage due to incorrect information on your report. You can, occasionally,
an experience letter regarding your claims history by contacting the underwriting
department of your current insurance company. An experience letter is
of your loss history with your current insurance company. This is a good
do prior to changing insurance companies. If there is an error in your
history, you can be on top of it and resolve it before it causes you a
states require the insurance company to respond to your request within
a set number
of days from receipt of your request.
Another underwriting tool used by insurance companies is conducting an
investigation. This isn't done as often as it once was; however, in some
cases at the
company's discretion, they will conduct one. This investigation usually
verifying your employment, talking to you or your neighbors and doing
a more in-
depth search into your habits and lifestyle. This may also include verifying
of the vehicle(s) you insure and the number of drivers in your household.
nothing to be concerned with if you have supplied the insurance company
accurate information; although, the issue of privacy may be raised at
How far should an insurance company be allowed to go in determining
are an acceptable driving risk?
You must realize not everything outlined in this Section will be the same
all insurance companies. You must choose which issues are most important
in selecting an insurance company. Some issues will be of lesser or greater
importance and the method of prioritizing will be different for each individual.
Your knowing the information in this Section will give you the upper
hand in shopping for and obtaining the best possible deal on your auto
Good luck in your search!
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