What Your Auto Insurer Knows About You
If you are facing a DUI case, you should know that your auto insurance company is likely going to change your rates. In fact, you could even lose your insurance all together. You can get help explaining your DUI to your insurance company by speaking with a skilled DUI lawyer today.
When you apply for an insurance policy or submit a claim, you're probably unaware of the streams of information about you that flow to your insurance company, private businesses, and your previous insurer. Mark Twain once wrote that insurance companies are a "power behind the throne that (is) more powerful than the throne itself," but that was more than 100 years ago. Today, the true power lies in the hands of the database companies that make their money by selling information about you.
Most insurers look at your credit
In a Conning and Co. study completed in July 2001, about 92 percent of insurers reported using scoring, including credit data, in deciding auto insurance policy premiums.
Since 1998, the use of such scoring has expanded greatly, according to Conning and Co., with insurers saying that they responded to scoring initiatives taken by the competition.
More than half of the insurers surveyed say they use the scores to place you in a rate class (like preferred, standard, or high-risk) and to set a price for you within that class. Nearly all say they use it for new business only, according to the study.
Supporters of scoring say there is a direct correlation between your score and the likelihood that you'll make a claim, but critics maintain that it permits insurers to charge higher premiums to lower income households.
Scoring your finances
What the auto insurance industry calls "credit scores" are actually "insurance risk scores." Both scores are based on information contained in your full credit report, but they put weight on different factors in order to calculate a final score. Thus, even if you purchase your credit score from one of the major credit-reporting agencies, you still don't know your "insurance risk score," which is not available to you.
According to Craig Watts of Fair, Isaac & Co., a provider of scores, a regular credit score weights data in order to evaluate your use of money. But insurance scores give weight to data in order to evaluate your stability. So, if you've paid your bills in a timely manner and you've had accounts open for a long time, you would be considered more "stable" than someone who has been delinquent and opens and closes accounts frequently. Credit scores and insurance scores generally move in the same direction as your credit history changes (meaning move up or down), but there could be cases where you have credit activity that impacts one score more than the other.If you have some unusual activity within the month before you buy DUI auto insurance, your insurance score could be downgraded. Insurers may then consider you a bad risk (where allowed by law) and refuse to sell you a policy, or charge you a higher premium for a policy. However, if you decrease your credit activity and wait a month to purchase your insurance, you could help your chances. Remember that there are many factors that insurers use when evaluating you as an auto or home insurance customer, including your driving record (for auto insurance only), your personal claims history, and where you live.
Again, it is so important to point out the fact that a DUI case is serious business, for your life and for your finances. DUI car insurance rates may skyrocket. Donít let this happen to you. Talk to a DUI attorney about your case right away.
Some insurers have their own "scores"
After investigation, State Farm - the country's largest auto insurer - decided to use "prior loss history and certain credit characteristics" to create a model that helps it determine an underwriting score for a policyholder applying for a homeowners or auto policy.
State Farm says, "It is significant that we are combining credit characteristics and prior claims history for these models and that we have developed the models using our own book of business. Our models are not designed to assess wealth, income, or creditworthiness, but focuses on the prediction of future insurance losses."
State Farm adds that it believes the "use of this model will lessen the extent to which those who represent higher potential risk are subsidized by those who represent lower potential risk."
Checking your records
Most of the information that auto insurance companies collect and use for rating purposes is available from government agencies credit-reporting companies. For example, you can get a copy of your motor vehicle report from your state's department of motor vehicles.
You can acquire a copy of the ISO All Claims report if you dispute the information it contains. The ISO Auto Property Loss Underwriting Service (A-Plus) report provides insurance underwriters with the means to independently investigate and evaluate potential risks. Consumers can call 800 709-8842 to obtain copy of their report. A "request for disclosure" form must be completed.
If you are facing drunk driving charges, you need to get help from a skilled DUI lawyer. A DUI case is pending and your life is on hold until you make these charges go away. You could go to jail, pay serious fines, and lose your license. Your auto insurance is at risk as well. Talk to a DUI lawyer today to get help.