How Your Car Insurance History Affects You

Your car insurance history plays directly into calculating your rates. One at-fault claim on your record can raise your rates by $137.75/mo on average.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Apr 28, 2020

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Here's what you need to know...

  • The concept of insurance isn’t a new one. Since the ancient times, people have been buying insurance for their goods and property that were being shipped overseas to protect their property against piracy or shipwreck
  • However, car insurance is a newer concept; one that is less than 112 years old, and the requirement for insurance is even newer, with the first state requiring its drivers to carry car insurance in 1927
  • Car insurance was developed to protect the people outside of the car, not inside of the car
  • If you can’t pay for your car insurance, then you shouldn’t be driving. It isn’t fair to other drivers, especially if you cause an auto accident

All 50 states require their drivers to carry some auto insurance or proof of ability to pay for significant damages to driver their vehicles on public roadways. Most states also require you to carry insurance on any registered vehicle, whether it is being driven or not.

Even other countries require their drivers to have car insurance to drive, which is why car insurance is the most sold insurance type in the entire world.

The reason that car insurance became a requirement was that people had no way of ensuring their safety when someone would drive an automobile on the roads.

Cars were notoriously unstable. They often ran orff the road, and night driving was extremely dangerous.

This resulted in the damage of property as well as injury to people and their livestock. States had to come up with a way to make drivers fiscally responsible for the damage that they were causing.

Also, it was thought that an insurance requirement would cause drivers to drive with more caution than they were before.

It wasn’t until several years after the first policies were written that insurance companies developed policies that protected car owners as well. There isn’t a single state that requires you to carry anything other than liability and sometimes medical insurance on your vehicle.

What many people forget is that they aren’t buying car insurance to protect their vehicle, they are buying to protect others against their mistakes or outright dangerous driving.

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What Affects Your Car Insurance Rates

Wouldn’t it be nice if you could go online and check your claims history to see what is affecting your rates? Well, there is good news and bad news for you.

The good news is, that with a bit of time and effort you can get your entire car insurance history, usually without having to pay any money at all.

To do this, all you have to do is call your current insurer and ask for your insurance history. In most cases, they will be happy to tell you what is showing up on your history report right over the phone.

If you need an actual hard copy of your history, it is possible that the car insurance company may charge you a couple of dollars to print out your information and then send it to you. There is no way to tell whether this is the policy of your insurance company until you ask for the information.

If you have had more than one insurance company in recent years, then you will have to contact your other insurance companies to get this information. They may not be as forthcoming with you as your current insurance company will, but it doesn’t hurt to try.

If you need the information because you need it for a lawsuit, then the insurance company is required to provide you with that information.

The other source for your car insurance history is with a CLUE report. This is the bad news. This information is only available to insurance companies, which means that you can’t access it yourself.

You can, however, ask your insurance agent to access the CLUE report for you, and this is perfectly legal. Your agent will probably charge you for this service because the insurance company has to pay a fee to acquire this information for you.

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How Car Insurance History Affects Your Rates

In most cases, if you receive an unexpected rate hike and you don’t know why you can call your insurance company and ask them about the reason for the increase. In many cases it will be due to them receiving new information, either about your driving history or about your claims history.

When you purchase car insurance, the car insurance company will research your past claims to determine how much they are going to charge you for your rates.

Here is the bad news, if you have made a lot of insurance claims, then you are going to have to pay more for your premiums.

The good news is that if you are switching insurance companies, your premiums won’t be as high as they would be if you stayed with the company that paid the claims. In fact, good drivers may be eligible for no claims discounts.

Car Insurance History Isn’t the Only Thing that Affects Your Rates

While your car insurance history is imperative when it comes to buying car insurance, it isn’t all that affects your car insurance rates. You need to be aware of your driving record as well.

In most states, every time you get a traffic ticket or are in an auto accident, points are assigned to your driver’s license. The insurance company runs your DMV report when you apply for auto insurance, and that will affect your rates.

Think about your driving record in the similar vein of your credit score; you need to be aware of what it says because it can affect you financially.

Other things that affect your rates are the following:

  • Age
  • College degree
  • Type of car you drive
  • Gender
  • Marital status

There are also discounts that you can take advantage of in order to get lower rates, such as safe driving, multiple policy discounts, loyalty discounts and so on.

Car insurance rates fluctuate on a daily basis, although once you sign your contract, your rates won’t change until your policy expires.

If you get a rate increase, then you need to take the time to get quotes from multiple companies before you agree to your new policy.

Also, if you are buying insurance for the first time, then car insurance quotes will ensure that you don’t overpay for the policy that you need. Quote tools are free and easy to use.

Enter your ZIP code to start comparing car insurance rates right now!

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