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What's a person to do when he or she wants to buy auto insurance
after a long period of going without coverage? Many Americans find
themselves in this situation when they've driven while uninsured
because of tough financial times, poor driving records, or indolent
attitudes. And the insurance system might not be welcoming to long-time
insurance evaders who want to purchase coverage.
| The insurance system might not be welcoming to long-time insurance evaders. |
Insurance companies
investigate all potential policyholders before selling policies to
them. Your insurer will look into your past to gauge the amount of risk
you pose; look at your credit history or your credit score to find out
how financially responsible you've been; and evaluate your driving
record. Have you had any tickets or accidents in the last three years?
Your insurance company will look into your claims history, and when it
finds you have no claims history because you've had no auto insurance,
you might find yourself relegated to the expensive "high-risk" (also
known as "nonstandard") driver category.
"They're not going to get a discount
for being a long-term policyholder, that's for sure," quips Kathleen
Jensen, insurance services counsel at the National Association of
Independent Insurers. "It would affect the person the way any other
insured would be affected. If you're a poorer risk, you might pay more
than a standard-risk person," she says.
"[Several] years is too long a time without a track record of insurance." |
Bob Cunningham, spokesperson for Nationwide Insurance Co., says, "We
would not insure an individual who's gone [several] years without
coverage because of the long-term absence of insurance experience.
We'll look at each individual case, and I'm not going to say we put a
year limit on individuals, but [several] years is too long a time
without a track record of insurance, even with a clean driving record."
Dennis Schain, a spokesperson for The
Travelers, says, "There's the potential for higher rates, but it all
depends on the person's vehicle and his or her driving history." Schain
says his company would accept drivers who have had a lapse in coverage,
and depending on the length of the insurance delinquency, the customer
might be eligible for a preferred rate, standard rate, or nonstandard
rate.
Many
companies will treat drivers with a lapse in coverage as higher risks,
but at the Chubb Group, an extended layoff from auto insurance likely
won't mean higher premiums.
"We're going
to be confident that we can offer this person insurance," says
Christoph Ritterson, marketing and sales manager for personal lines at
Chubb. "By checking the CLUE report and the driving history, we'll be
able to be comfortable that there's a good story as to why he's not had
the insurance." If the insurance evader has a clean driving record and
has no claims made against him, he'll be in the "most-preferred
category" at Chubb, according to Ritterson.
CLUE
reports are generated by ChoicePoint, a division of credit-history
reporting giant Equifax, and contain your credit history, claims
history, and driving history information.
Ritterson
says that Chubb doesn't set customers' rates based on the applicant
having had previous insurance. He stops short of saying his company
"welcomes" the long-time uninsured, but notes that "Chubb is
aggressively writing new auto business."
Other
companies are welcoming new business with relatively open arms, too.
"If we can't insure the person, there are lots of nonstandard auto
insurers that can," promises Schain of The Travelers.
Indeed,
there has been a recent flurry of insurance activity on the high-risk
driver front. A number of companies have begun selling auto insurance
to those with less-than-stellar driving and claims histories. So, even
if you've been out of the insured ranks for an extended period of time,
you're likely to be able to pick up coverage. (For more, see Auto insurers seeing profit in risky drivers.)
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