I am on the phone with an agent. We are speaking about an application she submitted online earlier that day. Her client is due to come in and set up insurance that afternoon. Her phone call is prompted by my denial of the application.
I had denied this application because her client had a DUI eight years previously. Not only that but the application shows one driver in the household, but my reports tell me there are five. Of course, like any good agent she wants the particulars so she can fill in the insured and like any good underwriter, I was checking her agency loss history before she called.
In my experience, what happens most times is they call the agency and in an effort to get things done quickly, the agent gets some basic information, sets up the appointment, and promises some quotes when they arrive – sight unseen.
Before they arrive with their bundle of policy declarations pages, you have the opportunity to run a motor vehicle report. Largely, you could tell what type of insurance they require, how many household residents, if they need an umbrella, if they need an HO-3 or an HO-4/6, how many cars they actually own, how long they have had a license, where they have lived before, and if they have ever lost their license.
The motor vehicle report reveals things such as: (1) Major and minor violations in the household; (2) Household members and/or vehicles in the household; (3) Bad checks or bad financial risk.
Major and minor violations in the household
Generally insurance companies look back 5 to 10 years for major violations like driving while impaired, driving under the influence, refusal to take chemical test, reckless driving, or vehicular homicide. License suspension is tricky since some states will suspend a license for grievances that do not pertain to driving. Minor violations incur a look back between 3 to 5 years. Non-violations like parking tickets and seat belt tickets should not be counted.
For minor violations like speeding, disregard of signal, red light camera, failure to yield, etc. it is best to look at the frequency of the violations. Did they have one in the past three years or one every year for the past three years? You may have an insured ‘forgiven’ of one violation, but not numerous.
Concentrate on to the points too. Did they get a six or nine point ticket for speeding? In most states that may also be considered or equal to a reckless driving. In states like New Jersey, nine points or more puts an insured into the state program or PAIP.
In states like Indiana and Illinois, the point system is different than in most other states. For instance a speeding ticket in Pennsylvania might be 2 points; where as in Indiana and Illinois the insured would incur 20 points for the same ticket.
Also pay attention to the seat belt violations and accidents. I once had an insured who had ten seat belt tickets, two each month from May to September, in one year. Turns out they were all originally speeding tickets that he fought in court and were reduced on his record.
If you are insuring in states near a coast line or large lakes, please note that some of these violations may have occurred on the water and not in a moving vehicle. Still the company will consider them.
The insured should understand that it does not matter what state or what car the violation occurred, it is still counted. If they are disputing violations, have them contact the motor vehicle department.
Household members and/or vehicles in the household
On an auto policy, you should be reporting all drivers in the household on the application. When you run a motor vehicle report, you have an opportunity to see how many residents are reporting that address on their driver’s license, how many cars are in the household, who the cars are registered i.e.: bank loan and/or co-ownership.
In states like Michigan and Texas, the state will report household residents and give you their date of birth and driver’s license number. Where as in states like California, no household information is reported. Further, states like Indiana and New York will tell you if a house hold resident is in the United States on a temporary visa and when the visa expires.
If the insured debates the household record, the company may require proof depending the risk. For instance, all the individuals listed in the household have the same last name. The company may ask for an address for individuals listed and/or of a copy of that relative’s license or utility bill.
Bad checks or bad financial risk
There are states such as Arizona that will indicate if they received a bad or insufficient funds check from the insured. Some report on failure to make child support payments.
Mainly the states will tell you if the insurance surcharge was paid or not. This should tell you if there is current insurance or if the prospective client has continuous insurance.
None of the above information should be an automatic denial for the agent. As I have stated before, there should be other carriers, policies and workarounds in place for the agency. As always it is good to speak to the insured about your findings and determine a course of action together.
In lieu of this, some larger auto insurance companies have more sophisticated programs to obtain much more information about the insured and their vehicle(s). Some carriers also provide this service as part of their application submission, more do not. To purchase software and run these reports is costly, but a good investment toward a lower agency loss/claim history.