Do auto insurance companies do background checks?
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UPDATED: Mar 3, 2022
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- Background checks affect car insurance rates with many companies
- Criminal records go further back than driving records
- Credit reports are utilized to determine car insurance rates
- Convictions often guarantee higher car insurance rates
- Dropped charges don’t always mean higher rates
Auto insurance companies put their own money on the line when they offer to insure you, which is why your background is up for grabs as far as they are concerned.
You know some car insurance companies check your credit report to determine your risk as a customer. You also know they check your driving record to see what kind of driver you are.
Did you know they also check your criminal background report to see if you’ve been convicted of specific crimes? Your background report contains many of the specifics most car insurance companies look for when deciding how to insure a potential customer. Background checks include the following:
Background checks include the following:
- Criminal Background
- Litigation Records
- Driving Records
- Education Records
- Employment Information
- Financial Information
Car insurance agencies aren’t always going to check the same background information, which is why a comparison is important. Some companies put far more weight on credit history while others put more weight on the criminal or employment aspect of a background check. In recent years, there have been more questions about drug testing as well, as insurance companies gather information about you.
Looking at one or two companies might result in only high premium quotes if they check more than just your driving record.
Comparing numerous companies for quotes is how you find the best rates and the companies not interested in what you did when you were younger. Enter your zip code into our free comparison tool to find the best rate for your situation today!
How does checking background information help insurance companies?
Car insurance companies want to know they’re providing insurance to drivers who won’t cost them more money than they pay.
Bad drivers, those with criminal backgrounds, without a solid insurance history, and those who have a bad credit history are all considered risky investments, and car insurance companies want you to pay more than good drivers with clean criminal and credit histories.
This still begs the question of why your background is so important. Driving histories contain many facts about your driving habits, but they don’t always tell the entire story.
Your background record dates back much further than your driving record, and it includes criminal history and arrest records that might indicate what kind of driver you are.
Just because you’ve been driving responsibly for the past few years means nothing if your new insurance agency finds out your criminal background contains a DUI even if it was from more than a decade ago.
It’s helpful to insurance companies to delve a little deeper into your history to help them make an educated decision about your rates.
You want to compare rates to ensure you’re getting the best deal from your insurance company, and they want to compare your driving record to other information they find during a background check to make sure they’re getting the best deal for their money.
It’s always all about the bottom line.
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What do car insurance companies check?
What one car insurance company finds important might not be the same thing another company finds important. The policy is different at each company, which is what makes it vital consumers check with more than one to find the best rates.
When a car insurance company is contacted for a quote, they check on numerous factors including many of the following.
- Personal Information – This verifies you are who you say you are.
- Credit Report – Your credit report indicates how responsible you are, which is what many companies do a credit check as part of the application process. If you have a good credit score, you’re considered less of a risk to insure.
- Criminal Background Check – Your criminal background report tells the insurance companies with which you are receiving quotes if you’ve been accused of any negative driving charges or convicted of the same.
- Driving Record – Your driving record tells the agencies if you have a penchant for speeding, causing accidents, or otherwise driving poorly and increasing your chances of causing and/or being involved in an accident.
- Marital Status – Your marital status is just one form of information used to determine rates. Married couples are often less expensive to insure as they appear more responsible than their single counterparts.
- Address and Employment Information – Your address and employment information is used to determine your rates. If you live in a safe neighborhood with a positive economic status as well as a low crime rate, you’re going to get a better rate than someone who lives where most people are uninsured and more willing to commit crimes.
- Vehicle Information – Your employment information is used to determine how often you are on the road, which has a significant impact on the rates you get when you compare insurance company quotes.
Most of this information is easily found when performing a background check.
It doesn’t mean all companies will perform a background check on you if they only want your driving record and credit report, but many companies do utilize the freedom to perform background checks.
Some companies put a lot of weight on the criminal aspect of your background check to see if you’ve been involved in any vehicle-related accidents, arrests and charges, or convictions.
What shows up on your driving record?
Your driving history is one of the most significant factors for insurance companies when they are setting your rates. Your driving record is kept by the Department of Motor Vehicles and it lists the driving-related infractions you’ve been charged with over a certain period of time.
The amount of time an infraction stays on your record varies by state and by the infraction. A speeding ticket typically stays on your record for three years.
In addition to an account of your infractions, your driving record contains information about fines you’ve paid (or not paid), accidents you’ve been in, driving courses you’ve taken, and any license suspensions or other penalties you’ve incurred.
Driver record checks are conducted by all insurance companies during the policy application process, but each company will weigh infractions a little differently when it comes to setting your rates.
Is there a difference between being accused and convicted?
If the background check process reveals that you were arrested and charged with a DUI at some point, it’s not going to look as bad as a conviction. There is a difference, and knowing it can help you better compare car insurance quotes with numerous insurance agencies.
Those who are familiar with the law know there is a lot to consider, and this is a complex series of definitions that might not always make sense.
If you’re not familiar with the law, you probably haven’t been arrested or even charged with any criminal offenses, which is good news for both your driving record and your criminal history background check. A charge is what comes first.
When you’re arrested for breaking the law, you’re charged with a crime. Once you’re charged, you’ll go to court to trial or sentencing. It’s up to your lawyer to prove your innocence so you aren’t convicted. Conviction means you’re found guilty of a crime.
If it’s proven there is insufficient evidence or any other factor emerges that proves you did not commit a crime or you cannot be charged for it, your charges are dropped.
Insurance agencies can still see the charges, but they also see the lack of conviction.
It’s imperative you know your criminal background as well as the rest of the information your background check contains if you plan on shopping around for car insurance quotes.
One company might view an arrest made for a DUI or reckless driving 20 years ago as a valid reason to increase your car insurance rates.
Another company might decide you’ve been a great driver for the past 20 years without so much as a ticket or a warning, and that means you’re going to get the best possible rates from them.
Each company in the insurance industry views accusations and criminal convictions a little differently.
Driving is a privilege and insuring yourself, your family, and your car is not an option. It’s not an option if your vehicle is leased or you have a loan. If you own it outright, it’s still wise to insure your vehicle and even required in some states.
Know what works best, how your background can affect your rates and know not all insurance companies are created equal.
If at first you don’t receive an affordable quote, compare prices at other companies until you find one willing to work with you for who you are now rather than who you were in the past. Use our free rate comparison tool today to get started finding the best policy for you!