Do insurance companies share information?

It is a fact that insurers share driver information, but how do insurance companies share information?

Virtually every insurance company “subscribes” to a service and purchases reports that discuss an individual’s motor vehicle records and insurance claims history for pricing purposes. When you file a claim, even a small one, it’s registered in the claims system that other companies can then pull from when determining your rates.

This guide explains how insurance companies share information with each other and what it means for your auto insurance rates.

How Insurance Companies Share Information

Insurance companies order reports and apply them “in the background” while your policy is being rated using an insurer’s computer software. If you work with an insurance agent, they would also potentially go into your state’s system to check for tickets and other incidents. They would also order the CLUE report through the auto insurance company’s website.

Insurers spend big dollars every year “ordering” these reports. Depending on which state you reside, they can cost as much as $7.00 each. This is why an auto insurance company will typically run these reports when you get your initial quote.

It doesn’t sound like much until you take into account that a particular insurer may have to order several thousand per day and certainly don’t sell every policy they quote.

Do car insurers share information about quotes?

Keep in mind that insurance companies don’t inform each other when you get new quotes. It’s just things directly related to your driving record and how long you’ve been with your current auto insurance company.

Read More: Do Insurance Companies Check Driving Records?

Do health insurance companies share information?

There are no restrictions under HIPAA for accessing health records with specific identifying information removed. Your health provider can also share your information about your health with your insurance company for billing purposes. They can access your record while doing an audit.

So, every insurer has access to medical data that exists about you. Moreover, they talk with doctors and hospitals, they examine your records, they talk to your dentist if necessary, and of course, they talk to each other.

Read more: Best Health Insurance Companies

What driving reports are available?

So how can insurance companies share information? Your motor vehicle record (MVR) and CLUE report are the two most common records dug up to determine if a particular company will insure you and, if so, how much they’ll charge for coverage.

It’s becoming increasingly more common for credit history, known as an insurance score in the industry, to be used as well. Not all companies do, but some want to measure the likelihood that you’ll pay your premiums on time. A bad credit score could be seen as a sign of riskier behavior in general. At the very least, some companies will require a deposit upfront before issuing you coverage.

Your insurance score can result in as much as a 35% swing in your insurance premium, so it’s hugely important!

Read more: Do insurance companies check credit?

Is there any way around driving reports?

If you are hoping to change insurance companies to “get around” a ticket or an accident, you’re likely out of luck. The entire purpose of these reports is to make sure (as accurately as possible) that an insurer is collecting the correct premium based on the risk you represent to their bottom line…in the form of insurance claims.

The more tickets and accidents you’ve got on your record, not to mention the less perfect your credit history, the riskier you are to the insurer.

More Risk = Higher Premium

There are some companies out there that will take your word for it when asking about claims history.

But you will only find this with the true non-standard insurance companies, and it doesn’t necessarily lead to a lower premium, as they price accordingly. This means they “build in” premium to every policy, as they assume their clients fit the non-standard program for a reason.

Read More: Do insurance companies report accidents to the DMV?

Other Ways to Save on Auto Insurance

Insurance companies do share information in order to determine car insurance rates for their policyholders. Often, it’s the people who only have one accident or ticket who are the most worried. There’s something about being so close to a perfect record and paying the extra premium because of one mistake. This might also apply to people who previously had a lot of tickets but who have made significant efforts to drive safer. (For more information, read our “What are the benefits of insurance and why does it exist?“).

Switching insurance companies could save you a lot of money. Each insurer has a different risk appetite, which means it may actually be seeking to insure someone with a less-than-perfect driving history. Use our comparison tool to shop around and find affordable auto insurance quotes (read our full “What is an insurance quote?” for more information) near you.

As you shop, be open to options like telematics programs with your auto insurance policy. Letting an insurance company track your driving behaviors for 90 days could get you an immediate discount and a bigger discount after the 90 days by allowing insurance companies to measure the risk you present as you drive right now.

Read more: Do I have to tell my insurance company about my speeding ticket?