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Check your auto’s claims history for accuracy so insurance premiums don’t skyrocket

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 | November 9, 2017
Check your auto’s claims history for accuracy so insurance premiums don’t skyrocket

Checking your credit report, updating insurance policies and rewriting a will are probably tasks you don’t do each year, or even when you’ve had life-changing events such as getting married or having a baby.

They can often save you time and money, though sometimes they can lead to more cost but extra protection — such as adding a child to your health or life insurance policies.

Add one more chore to that list — checking the claims history for accuracy on your car. Just like checking a credit report a few times a year to make sure it’s accurate and your credit score isn’t dinged for something you didn’t do, and thus getting you the best loan rates, checking a car’s claims history can prevent your auto insurance premiums from going through the roof.

If you’re listed at fault for an auto accident that another driver was actually found to be responsible for, it could cause your car insurance to rise — a lot. Fixing that error and checking for others can help when your auto insurance next comes up for renewal.

Start with C.L.U.E.

More than 99 percent of auto insurance companies provide claims data to the C.L.U.E. Auto Report, also called the Comprehensive Loss Underwriting Exchange. Owned by LexisNexis Risk Solutions, the reports contain up to seven years of personal auto claims data.

Insurance underwriters use claim information, type of loss, amount paid, vehicle information, a fault indicator and other information in the reports to predict future claims and thus set insurance rates. Other information included in the reports include name, date of birth, policy number and date of loss. The report may also show such details as the type of payment by claim type.

What may be most important to a policy holder is a fault indicator, which does exactly what you’d think it would do — indicates who was at fault for a particular accident. The accuracy of this part of the report is critical, according to the Consumer Federation of America, which recommends checking a C.L.U.E. auto report for accuracy. Insurers will check the report for new applicants and possibly when a policy comes up for renewal.

“An accurate C.L.U.E. report is essential as it will be an important component of the auto premium calculation,” says Mark Romano, director of insurance claims project at CFA, in a  statement.

In addition to helping underwriters reduce risk and liability in predicting future claims, the auto reports also help insurance companies avoid what they call “premium leakage” by not missing drivers who caused accidents that somehow weren’t reported on an insurance application.

LexisNexis found in a 2012 study of a group of insurance applicants reported by third parties as having no prior claims history and not requiring a C.L.U.E. Auto Report that when they were run through C.L.U.E. for the first time, 49 percent were found to have had prior claims history. The lifetime premium leakage associated with those missed claims totaled more than $1 million, according to LexisNexis.

In other words, almost half of the people that were thought to have no auto insurance claims actually did, and they didn’t have to pay $1 million in higher insurance premiums.

How to check your report

Federal laws allow consumers to periodically request a copy of their C.L.U.E. Auto Report from their auto insurance company or from LexisNexis Risk Solutions.

The CFA recommends reviewing all of the data fields for accuracy, especially the fault indicator field. Also make sure that no claim information is listed more than once or that there are any claims listed that you don’t know about.

If you find inaccurate information that needs to be corrected or updated, the CFA recommends making the request in writing to both LexisNexis Risk Solutions and the insurance carrier involved. According to the CFA, reports and corrections can be requested from LexisNexis at:

•   LexisNexis Consumer Center

P.O. Box 105108

Atlanta, GA 30348-5108

•   Phone: 1-800-456-6004

On its website, LexisNexis gives a different address and phone number for requesting C.L.U.E. reports, and has a report order form that can be downloaded and mailed in.

The U.S. Fair Credit Reporting Act requires that agencies such as LexisNexis “conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the file” within 30 days of receiving the dispute.

After the 30 days, consumers should follow up and get another copy of their C.L.U.E. Auto Report to make sure the appropriate changes were made. If not, they should contact their state department of insurance for assistance, the CFA says.

Check this report once a year for accuracy and who knows, you may be in the mood to check your credit report for errors and write a will.