If Big Brother is watching, he just may be your insurance company. No matter what insurance company you use, it is guaranteed that they know plenty more about you than you know about them. When you apply for a new insurance policy or when you submit a claim, the insurance carrier gathers a wealth of information about you.
The insurance carriers obtain your credit score and utilize in making decisions. However, they use your score to create something different. By giving different weights to different factors than the credit bureaus, they come up with what is called an insurance risk score. You can obtain your credit score, but you cannot find out what your insurance risk score. Studies have been done that show a direct correlation between someone’s credit score and on how likely they will be to file a claim. The better the credit, the less you will pay for insurance coverage.
Your insurance company will certainly check your driving record. This has a direct effect on whether or not they will insure you and on how much your insurance premiums will be. Driving records are essential as a predictor of insurance risk, and are utilized by all insurance firms.
Insurance firms often buy comprehensive information about potential customers from large database companies. This information could contain your credit report, your driving history, your claims history, your address history, criminal records, lawsuit history, aliases, and the history of vehicles. As much information that can be gathered will be used in making any decisions.
You can double check much of the information that is used by insurance firms. You can obtain a copy of your credit report from Equifax, Transunion, or Experian. You can write to the Department of Motor Vehicles in your state to get a copy of your driving record. It is always good to check for errors on a regular basis. Errors are common, and one error can cost you.
Personal information about your spending habits and your driving experience is vital in assessing risk. Insurance companies use as much information as possible when making decisions on who to insure and how much to charge. The amount of personal information that insurance companies will learn about you will most likely continue to increase as technology improves and the cost of doing business rises. More information means better decisions, and that means more profit for the insurance carriers.