Car insurance is necessary to protect policyholders from paying for certain expenses out of pocket. This insurance is immensely beneficial when you get into an accident or damage your car. One of the primary concerns for many policyholders is data privacy. Are auto insurance companies sharing consumer information with other parties?
Generally, your auto insurance company is supposed to protect your private information. However, there are some circumstances where information sharing can occur.
Purpose of Information Sharing with the Insurance Company
Auto insurance companies primarily want information about drivers to determine rates. These agencies will verify your age, vehicle type, driving record, past claims, and more data to come up with premiums for your policy.
The issue of information sharing typically occurs when you get into an accident and multiple insurance companies are involved or when you are in the market for a new policy.
However, your insurance company is not likely to share your information. Instead, the insurance company will access information from a reporting agency. A reporting agency is the source of all information related to your driving past.
All insurance companies have access to the information the reporting agency records, including accident reports, vehicle information, driver history, and insurance claims history.
Privacy Concerns
Since insurance companies are required to protect your information, they can only share it if you give them written permission. You would need to sign a document opting out of the privacy notice before they share that information with other parties. This situation gets complicated when you think about the information that the reporting agency has.
Insurance companies have the right to access this information to adjust rates, but private data must be kept secure. If an insurer shares your personal information with third parties without your consent, it likely violates privacy laws.
Types of Information Shared with Auto Insurance Companies
An insurance company can request information about individual drivers from the reporting agency. This process is usually done when someone applies for a new policy or switches to a new insurance company.
LexisNexis is the leading consumer reporting agency for driver history. It has created the CLUE system, which stands for Comprehensive Loss Underwriting Exchange. These insurance companies can access various types of information in a CLUE report.
Accident Reports
If you have any accidents in your driving history, they will significantly impact your car insurance rates. Multiple accidents may indicate you are not the safest driver, even if you have been unlucky.
Auto insurance companies will use accident reports to determine your risk as a driver and adjust the cost of your policy. Accidents usually impact your rates most, so insurance carriers will first check your CLUE report for past collisions.
Driving Records
The next element of CLUE reports is the individual’s driving record. Driving records reveal past traffic violations, accidents, and other issues. If you have a clean driving record, the insurance company will likely offer lower rates for your policy.
However, if you have received multiple tickets or been involved in numerous accidents, you may be deemed an unsafe driver and charged more monthly to retain the policy.
Claims History
Another important CLUE factor is your history of insurance claims. A claim history reveals every time you have used coverage from the policy to pay for a service, such as repairs, vehicle replacement, or maintenance.
A driver with multiple claims in the past will be charged more on monthly premiums. Every time the policy is used for coverage, you could see a hike in your premiums. Rates may not always increase after a claim, but if you were at fault for an accident or filed multiple claims in a short timeframe, these could cause a rate increase.
Policy Information
Insurance history can also be found in CLUE reports. The reporting agency will keep track of what your past policies have entailed, including coverage limits and premiums. This information is helpful for insurance companies because they can evaluate the coverage you have had in the past to determine the terms of your new policy if you are making a switch.
Policy information should only be shared in specific circumstances, such as motor vehicle accidents with other drivers or when purchasing a new policy. If you discover your policy information was shared in different circumstances, you may have a lawsuit for privacy violations.
Impact of Information Sharing on Auto Insurance Rates
Information in a CLUE report is primarily used to determine premiums for a driver’s insurance policy. Insurance companies will use the data for risk assessment during the application process, but it is not public information. Customers have the right to have their data protected even when applying for new policies or filing claims.
Below are a few ways you may be impacted when reporting agencies share information with your insurance company.
Rate Increases
Customers may experience higher premiums if they are considered unsafe drivers. Whether it is fair or not, your claims history, driving record, and personal information may state that you are a bit of a risk as a policyholder. If so, the insurance company may charge you higher premiums to mitigate the increased risk.
However, data privacy laws protect your information, so this data cannot be used against you if it is shared without your permission.
Rate Decreases
Just as rates can be increased based on this information, they can also be decreased. For example, if there is an error in your record that gets corrected, it could lead to lower premiums.
Perhaps you were involved in an accident that was not your fault, but this report names you the at-fault party. This error, when corrected, should lower your rates if they were increased because of your perceived fault.
You can get a free copy of your report once a year, so if you are concerned about a sudden hike in your premiums, consider obtaining a copy to check for errors.
Protecting Your Privacy
Data privacy is essential these days. It is so easy for the wrong party to get its hands on your information and use it illegally, which can negatively impact your life. Whether you are applying for new insurance or have recently filed an insurance claim, there are several things you can do to prioritize data security.
Review Privacy Policies
First, look at the privacy policy of your insurance company. Do they have a process for obtaining permission to share your information? Do they lack clear guidelines regarding the protection of your information? If you notice gaps in their privacy policy, you may want to consider other options or inquire with an agent about how you can keep your information secure.
Limit Information Sharing
The most effective strategy to keep your information out of the wrong hands is to avoid sharing it in the first place. To create a policy, your insurer will need basic information such as your name, vehicle type, and other data.
However, sharing additional information with your policy carrier is unnecessary if the application includes optional items. The more you limit your information-sharing practices, the easier it will be to control the flow of information to the wrong parties.
Consider Alternative Insurers
If you review your company’s policies and find them wanting, you can always switch to a carrier with more secure practices. Although it may cost more to make this switch, protecting your information could save you a lot of money and hassle in the long run.
Look for insurers with stricter privacy policies to ensure your information is only shared with your consent and when necessary.
Secure Expert Legal Counsel!
Car insurance can be complicated, especially if you are involved in a car accident. Perhaps you are denied coverage and don’t know why. Maybe your insurance rates suddenly increased, even though you were not at fault for the collision or it was your first accident.
Numerous things can go wrong with insurance, so you must consider expert legal guidance to navigate the situation.
Rosenfeld Injury Lawyers will help you navigate car insurance claims and privacy policies. Whether you are concerned about your information being shared or have recently been in an accident and need help with your claim, our legal team can help you understand your rights and pursue justice if you have been wronged.
Contact our team of experienced car insurance claim lawyers today for a free consultation about your auto insurance case. Call 888-424-5757 or complete the contact form.