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Why do Car Insurance providers run a background check?

Photo by Max Titov on Unsplash

Photo by Max Titov on Unsplash

Owning a car comes with a responsibility. You must follow the safety guidelines to keep yourself and others safe on the roads. Hence, when you aspire to buy your favourite automobile, think beyond the aesthetics. Consider the care you must take to ensure its safety. This includes driving cautiously and installing safety gear. While these steps are discretionary, General Insurance for vehicles is mandatory. 

If you own a four-wheeler, buy Car Insurance. The law mandates this to compensate Third-Party Liability. Besides a precautionary measure, Insurance is a financial product. By providing the service, insurers agree to pay for losses incurred due to accidents, theft, vandalism, etc. This makes them vulnerable to fraudsters or cheats who raise false claims. Hence, they perform a background check to know everything about the candidate. They check the following factors: 

Personal information

Identity confirmation is an essential aspect of record keeping. Insurance companies do this to follow the KYC regulations. They verify your identity to enrol Insurance Plan and accept claims. Doing this also helps prevent identity theft or data fraud. The same information comes in handy during Car Insurance renewal. The data gets auto-filled, which lets you renew your policy within clicks. 

Driving record

The goal of getting your four-wheeler insured is to protect it against the financial repercussions of accidents or mishaps. But this does not mean you get the liberty to rash drive. On the contrary, your driving record is crucial in determining the Insurance premium. Hence, insurers consider your driving record when buying Car Insurance online. They check the history of your accidents, traffic violations, license suspensions, speeding tickets, etc. 

Credit reports

Your credit record is an indicator of your financial health and credit behaviour. This helps the insurers understand your financial standing to pay the premium and handle minor claims. Also, it affects the voluntary or compulsory deductible on the policy. If you have a stable credit standing, you can contribute higher and vice versa. This impacts the premium amount and sum insured on the Car Insurance Policy. 

Car details

As your automobile is the property being insured, its inspection is foremost essential. Policy providers send an authorised vehicle inspector for this purpose. The officer checks your four-wheeler’s condition, model, activity, documents, etc. Photos and videos also get recorded for proof. These determine the premium amount based on suspectable risks. If you buy online Car Insurance, you can undertake self-inspection to save time.  

Criminal history

The person filing the claim for accidents, mishaps, theft, or vandalism should have no history of fraud. If so, it violates the authenticity of the claim. This is because insurers, like any other financial institution, are targeted by scammers. The only way to protect themselves from fraud is to give policies to candidates with a clean background. 

Therefore, assessing your record for criminal activity is a crucial step. If you have a clean record, you sail through getting a Car Policy. These records enable policy providers to ascertain your profile authenticity. This way, they mitigate risks associated with false claims and legally compromised drivers. It is best to self-screen them to correct errors and create a clean profile before buying the policy.

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