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16 questions insurers ask -- and why

By Posted : 05/20/2015

Steering wheelThere’s no way around it: When you compare car insurance quotes, you have to share information with auto insurers to get accurate rates in return.

Most of the information you’ll know off the top of your head.

You may need to look up some of it, though, and there are questions that may seem intrusive but ultimately help a car insurance company decide if it wants to offer you a policy and at what cost.

Here are 16 questions an auto insurer will ask, as well as why the information is important.

What is your ZIP code?

This question typically kicks off a car insurance quote and is the first building block of your premium.  A comparison site needs to know which of its clients can serve you, or a single insurer needs to know if it services your state. 

Why is it important?  Rates are usually set up by territorial ratings. If you live in a metropolitan area, you will normally pay more than someone who lives in a suburban or country setting.  Insurers look at the number and severity of auto insurance claims in an area to calculate base rates.. Cities typically have more traffic congestion and crime, which means more claims. 

What car will you be insuring?

You will need to know the year, make and model of the vehicle you want to insure. (You will need to supply a vehicle identification number, or VIN, if you find a policy you want to buy.)

Why? A vehicle’s claims history and repair costs are taken into account when determining rates because it shows the insurer how much, or little, of a risk your car is to insure.  A vehicle that is typically driven by families, like a minivan or SUV, will get better rates than a compact driven mostly by younger drivers.

This part isn’t about you – it’s about the claims filed by everyone who drives the same kind of car.

What is the primary use of your vehicle?

Be ready to say how you use your vehicle, such as:

  • Commuting to and from work
  • Commuting to school
  • Pleasure
  • Business
  • Farm
  • Artisan

Why? If you are driving your car many miles every day for business, that is a different type of risk for an insurer than a car that sits in a parking lot at work or a pleasure car that sits in the garage a majority of the time. 

How many miles do you drive each year?

You should have a fair estimate of how many miles you put on your vehicle annually. If you aren’t certain, try to calculate your weekly mileage and multiply by 52.

Why?  The more time you spend on the road each year, the more risk you are to an insurer.  “Average mileage” varies, but with most insurers it’s 10,000 to 12,000 annually.  Discounts are often offered if you drive fewer miles, especially less than 7,000 or so. If you drive many more miles than the average driver, your rates will be higher.

Does your car have an anti-theft device?

Knowing that you have an anti-theft device isn’t enough; you will need to know what type it is and if it’s active (you must arm it) or passive (arms automatically).  Check out your vehicle’s manual if you’re uncertain.

Why?  You can get a discount on comprehensive coverage for having an anti-theft device.  How much of a discount depends on what the device does. If the device can help track your car if it’s stolen, then it’s worth a bigger discount than a simple audible alarm. Devices that work without you having to activate them – “passive” devices such as an engine immobilizer – get you a bigger discount than “active” devices that require you to install a steering wheel lock or arm an alarm whenever you leave the car.

Who owns the car?

Tell the insurer if your car paid is for, financed or leased.

Why?  It doesn’t make a difference in your rates, but it can determine what coverages and limits you’ll be offered.

Insurers will require you buy collision and comprehensive coverage if you have financed or leased because they know lenders demand these coverages.  If you leased, then many insurers will only offer you higher liability limits of 100/300/50 (or more) because that is what leasing companies require.

If you own your car outright, you can buy only the legally required coverages if you want to.

What is your license status?

Choose from selections such as:

  • Permit
  • Valid
  • Suspended
  • Revoked
  • Expired
  • Foreign license

Why?  Clearly you want to have a valid license.  If you have a permit, suspended or revoked license, it will be harder to obtain a policy because not all insurers offer policies to new drivers (permit holders) or those whose current license status doesn’t allow them to drive.  Foreign licensed drivers do not have a verifiable driving record, so they have a harder time finding insurance and pay higher rates.

Are you married?

Select from married, single, divorced or widowed. 

Why?  Married couples get a discount that individuals do not.  Statistics have shown car insurance companies that married drivers are safer drivers.

What is your occupation?

Choose the job title that is closest to your current occupation from the list provided.

Why?  Insurance companies are all about risk, and data have shown that some jobs are correlated with fewer claims, which results in a discount.  Educators, scientists and military members tend to get offered such discounts. 

What is the highest level of education you’ve completed?

Select from high school degree, vocational school training or any type of college degree (associates to masters or beyond)..

Why?  If you went to college and obtained a bachelor’s degree or above, a discount may be coming your way.

Do you have any violations on your record?

The “look back” period for violations can be three to seven years. If you choose to buy a policy, the insurance company you choose will purchase a copy of your motor vehicle record. But for quoting purposes, it will rely on your memory.

Why? Your driving record is one of the most important rating factors that insurance companies use.  It’s a great indicator as to the risk you pose as a driver. The more violations you’ve had, the higher you can expect your rates to be.  The more recent the violation, the greater the perceived risk.

On the flip side, having a clean driving record will give you a good driver discount with most car insurance companies.

Do you have any accidents or claims on your record?

If you’ve had an accident, insurers want to know all about it -- the date and type of accident, whether a claim was paid and, if so, how much was paid out for the claim.

Why? Accidents again show the risk posed.  Some accidents or claims may not affect your rates, such as damage that was caused by hail or hitting a deer.  But, if there are multiple claims or accidents, even if you weren’t at fault for any of them, it shows a pattern that can raise your rates.

How many drivers are in your household?

Give the number and then be prepared to list all household licensed drivers. 

Why? Insurers assume all licensed household members will drive the insured vehicles, thus it requires you to share who these individuals are so they – and their driving records -- can be taken into account when rates are calculated. 

Are you a homeowner?

Pick from a list of residence types such as:

  • Live with parents
  • Renter
  • Condo owner
  • Single-family homeowner

Why? If you’re a homeowner, you can obtain a discount with many insurers.

Are you currently insured? 

If you are currently covered, say yes.  If you’re looking for your first policy or to get a new policy after a gap in coverage, say no.

Why? Insurers like drivers who have been continuously covered by insurance.  If you have a gap in coverage that may raise your rates – or even keep some insurers from offering you a policy.

What coverages do you want on your policy?

If you want the same coverages, limits and deductibles as your present policy, then have it handy to choose the same items.

Why? You can’t get a quote for car insurance unless the insurer knows what coverages, limits and deductibles you want to purchase.  

“Underwriting” checks all the facts

Don’t just tell the insurer what you think it wants to hear. 

Inaccurate information may help you get a better rate quote, but once bad information is exposed -- and it will be during the underwriting, or verification, process – your quote will be a bust.

An insurance company can decide to decline to offer you a policy at all – which is likely if you forgot something big like a DUI – or change your rate.  If the insurer has already issued the policy, it can ask for an additional premium to be paid to keep the policy intact, or it will cancel it.

If there is something that is hiking up your rates, remember that every insurance company prices risk differently. It’s the whole point of shopping around.

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