Car insurance rate factors are personal details insurers use to determine your rates. Some of these factors could be things you can’t control, like age or gender. They could also be your driving record, credit score, or even where you live. Another factor that providers consider is your claim history.
Insurance providers consider the claims you file to assess whether or not you’re a risky customer to serve. Insurers look at the total number you file, including the frequency. Generally, they look back at the last three years on your record. But they can go back ten years or more in some cases using the Claim Loss Underwriting Exchange (CLUE). So, even if you switch companies, your history follows you.
This article will explain the role played by your claim history in determining your premium. We’ll also show how far back insurers look and why that is. We’ll also advise when you should or shouldn’t file one. Finally, we’ll help you figure out how to lower your rates if your record has made you a high-risk driver.
Why Claim History Is a Rate Factor
Your claim history is a major factor that insurers consider when they choose your rates. This is because people that file often cost them more money. This translates to higher rates.
If you have several claims on your record, you also pose a higher risk for insurance companies. Generally, a policyholders that file often are prone to filing even more later. Per Kelley Blue Book, drivers who’ve filed one (even just one) in the past are 42% more likely to have higher rates than those who haven’t.
How Companies Can See Your Claim History
It’s no secret that insurers look at your claim history. But how do they do it? They use the Claim Loss Underwriting Exchange by LexisNexis®, or CLUE, to review your history. The tool produces a CLUE report that displays information about you, such as:
- Your name
- Your date of birth
- Insurance policy number
- Loss type
- Loss date
- Property description
- Info about the car or vehicle involved
- How much the provider has paid to cover the property
CLUE reports will only show claims that your insurance provider reports. This includes ones where an insurer:
- Pays out money to cover damages
- Denies a claim
- Opens up a claim file
Note that simply contacting your insurer doesn’t count against you. A claim is when you formally file to have your provider cover damages.
Insurers can get a report about you at any time. You may also obtain your own report if you want. This is so you can verify or review info about yourself to make sure it’s all correct. LexisNexis® offers a free report once each year that you can get about yourself.
When Will Insurers Look at Your CLUE Report?
Insurance companies will look at your CLUE report on occasion. This is usually when you request a quote or go to buy coverage. They’ll use the report to assess your risk and decide if they want to provide coverage to you. They also use it to determine your rates. The more claims you have, the higher your rates will be.
How Far Back Insurers Will Look
Car insurance claims don’t necessarily stay on your record forever. After a certain period, they won’t count them against you. The accident may still be on your record, but the insurer may stop using it to determine your rates. In general, this period is about three to five years. Some providers may look back as far as ten years, but this is rare.
Your driving record, however, doesn’t always work against you. Almost every insurer rewards customers that don’t get into accidents or file for a certain period. How much time varies depending on your provider. You may see this reward called the “safe driver” or “claims-free discount.” For example, State Farm offers a discount for drivers who go accident-free for three years.
When You Should and Shouldn’t File
Since filing a claim can raise your rates, you may consider not filing one in some situations. The natural way of thinking is to just file any time you get into an accident or damage your car. But this could end up costing you more money in the long run. You’ll want to decide whether it’s worth it to involve your insurance.
Whether or not you should file a claim depends on the situation and the type of damage that your car has. Here’s a breakdown of when you should and shouldn’t file:
When you should file
- You either never filed a claim or haven’t in a long time (three years or longer)
- The accident involves an injury
- The accident involves severe property damage
- The other car or property is expensive e.g., exotic or classic/collector cars
- You’re at fault for the accident
- The other party could sue you
- The cost to repair damage is excessive
When you shouldn’t file
- The damages cost less than your deductible. For example, you have windshield damage that costs $200 to repair, but your deductible is $500.
- You can afford to pay the damages (as long as it doesn’t ruin you)
- You’re wealthy
- You’ve already filed more than one claim in the last three years
Your decision to file should depend on what the consequences will be. If your rates are likely to skyrocket, you should consider paying for the damages yourself. But only do so if you can afford it. You should speak with your agent if you’re worried about what filing would do to your rates. One claim likely won’t do much of anything to your rates.
How to Lower Your Rates If Your History Is Bad
Even if you have a spotty history, you can still find ways to lower your rates. You should also think in the long term. Claims usually stay on your record for three to five years. If you can manage going three years without incident, you should see your rates decrease.
There are plenty of methods that you can use to slash your rates in the short term. Here are some of the best ways to lower your rates ASAP:
- Get discounts. Many insurers offer discounts for you to take advantage of. Examples of this include the good student, safe driver, multi-car, and multi-policy discounts.
- Avoid tickets and accidents. The cleaner your driving record is, the cheaper your insurance will be. Try to practice defensive driving techniques and avoid making mistakes. Never drink and drive.
- Shop around. Not all insurers offer the same rates. It’s smart to shop around and compare quotes to get the best deal.
- Live in a rural or less risky area. Where you live affects your rates. Try to avoid living in areas that have high crime rates or severe weather.
- Drive a safe car. Try to drive a car that has high safety ratings. You can also get discounts from your provider if your car has certain safety features (most new cars do).
- Have good credit. Having a good credit score will bode well for your rates. Making payments on time is the best way to keep a good credit score.
- Raise your deductible. Setting a higher deductible will result in lower rates. You should only do this if you can make the payment when you file a claim.
- Lower your coverage. This probably isn’t the best idea. But how much you pay for insurance depends on how much coverage you buy.
Frequently Asked Questions
What is CLUE?
CLUE is a report that you or your insurer can look at regarding your claims. It shows various info on what you’ve filed in the past. Providers use this info to view your history and assess your risk as a driver and customer. Having too many claims can cause a spike in your rates. The CLUE system makes it so you can’t hide your filing history if you want to switch companies.
How far back do insurers look?
Typically, insurers look as far as three to five years. This doesn’t necessarily mean that the claims on your record will be gone. It just means that they won’t use it against you when determining your rates after the time is up. Keep in mind that some carriers look back as far as ten years. But this is very rare.
Filing one claim within three years probably won’t hurt you, but more than one can become a problem. Before filing with your provider, you should ask your agent what the effect on your premiums might be.
Do providers share claim history?
Insurance companies do share claim history. All accidents go into the CLUE database, and all insurers access it to monitor your loss history. This means that if you have an accident with one company, you can’t switch to a new one and hope for lower rates.
How can I get a claim history report?
You can get an insurance claim history or CLUE report for free from LexisNexis. To do so, you have a few different options: