What Part of Your Records Are Accessed when Forming a Car Insurance Policy?

Car insurance companies vary in their approach to what is used and what is accessed when they compile information for your car insurance policy. Some companies use more of one type of report while other companies access other information to make a decision on if to offer you coverage. This information is used to try to make the most informed decision on who to offer coverage to and who to avoid offering coverage to. After all, car insurance companies must make informed decisions about potential drivers.

You must understand, before we get started, that a car insurance company must decide on if they want to insure you before they decide how much to charge. This isn't, or shouldn't, be based on your age, gender or race, but on a collection of data that gives them an idea of your personality and history. Car insurance companies must make informed decisions to try to avoid being open to extra liability in the case of accidents or fraud.

With that out of the way we can start to get down to specifics. There are a few different kinds of reports that a car insurance company may use to form an opinion of you and your history. These different reports will all combine to provide a comprehensive look into you and your personality.

1. Your Credit Report: This may surprise you as you are not applying for credit, but your credit history says a lot about you. If you are not likely to pay your debts you may not be likely to pay for your car insurance either. The better your credit score the better a rate may be on your car insurance policy.

2. Your Driving History: This may be information that is obtained from the state's records or it may be from insurance information that is shared across a network. Insurance companies are fiercely competitive, but they all have a common interest in sharing information to avoid fraud. If you have an excessive amount of claims in your past it will affect your insurance premiums.

3. Your Educational Background: This information will not be used to determine whether to provide you coverage or not, but could be used to decide your rate. Many companies give discounts to college graduates to promote higher education and reward those who have completed the accomplishment.

Insurance companies may use more or less information depending on the insurance company you use. Some weigh some reports more heavily than others, but most use different criteria in their decision making process.