Do Car Insurance Companies Do Background Checks?

Last Updated on September 30, 2020

Your record follows you around for a long time. If you’ve ever been convicted of a crime or have had issues with your credit, your future can be negatively affected.

car insurance background checkIf you have any blemishes on your background, you’re probably already aware of the trials and tribulations it can cause; for example, your record may have affected your ability to get a job or secure housing. However, did you know that your record might also impact your ability to obtain auto insurance?

While it’s pretty much common knowledge that car insurance companies assess the driving history of their would-be clients, many people are surprised to learn that a lot of carriers also do background checks.

If you drive, you are legally required to carry auto insurance; therefore, if you have a criminal conviction on your record or your credit is tarnished, it’s important to understand how your background can affect your ability to secure coverage. Keep on reading to find out what auto insurance providers take into consideration when determining if they should cover you and how your background might affect you.

Why Car Insurance Companies Conduct Background Checks

The car insurance industry is based on risks. In other words, insurance providers assume certain risks on each driver they cover. What’s the risk? – That a carrier will end up having to pay out more in claims than you pay them in premiums, which means that they stand a chance to lose a great deal of money. In order to understand how high the risk of insuring a driver is, car insurance providers assess the history of each prospective client.

The “cleaner” (for lack of you better word) your background is, the greater the chance that a carrier will offer you coverage. Moreover, if your record is “clean”, you’ll also receive a better rate. However, if your background is tarnished, you may end up having to pay more in premiums. Depending on the severity of infractions on your background, a car insurance provider may decide not to cover you at all.

Why does your history matter? Because to a car insurance company, the more issues you’ve had in your past, the greater the risk they are taking to insure you. For example, if you have been convicted of a DUI, there’s a greater chance that you could be involved in an accident, and thus, a car insurance provider will end up having to pay out a claim.

Driving Record, Criminal History, Credit Reports and Auto Insurance

There are three main aspects of your past that an auto insurance provider will assess when determining coverage:

  • Your driving record
  • Your criminal history
  • Your credit report

Driving Record

As mentioned, most people know that auto insurance providers check the driving record of their applicants. In fact, a driving record is one of the most crucial factors that carriers take into consideration when determining coverage. That’s because the more issues you’ve had while driving, the greater the likelihood of issues in the future. For instance, if you’ve been cited for several moving violations and have been found responsible for multiple collisions, insurance companies will consider you a high-risk driver. If, however, you have a clean driving record, you will be considered a low-risk driver.

Criminal History

Just like employers consider your criminal history, so do car insurance providers. The reason? – Your record can reveal a lot about you. Your driving history, which only highlights driving offenses, and typically, your record only goes back a few years; however, your criminal record illustrates any and all crimes that you have been charged with and/or convicted of, and charges and convictions stay on your record forever.

Insurance providers want to know about any and all serious offenses that could affect their risk of insuring you, even if those offenses occurred years ago. If you’ve been charged and convicted of a DUI 10 or 20 years ago, your criminal record will show it. For insurance companies, such a charge and conviction is important, as it can mean insuring you is higher risk.

Credit Report

Many auto insurance providers will also take your credit report into consideration when determining coverage. If your credit is limited or poor, a carrier might consider you a greater risk because there’s a chance that you may not make timely payments on your premiums, or you might not make payments at all.

How Your Background Affects Your Auto Insurance Coverage

The information car insurance providers acquire from your record can seriously impact your coverage. A marred background will likely mean that you will end up having to pay higher premiums. Additionally, instead of paying in installments, you might be required to pay for coverage up-front and in-full. Depending on the severity of charges and other infractions on your record, you may be considered too high-risk and may not qualify for insurance coverage at all.

James Shaffer
James Shaffer James Shaffer is a writer for and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
Back to Top