How is your driving record? Do you have any accidents, violations, or claims in the last three years?
Any major violations in the last five?”
Different companies will rate on violations and accidents differently. I cannot stress this enough. One company may not offer coverage at all to anyone who has a DUI. Some count major violations for five years (like DUI), some for three. The point being that it is possible to minimize your rates, even if you have serious issues with your driving record, by shopping your exact record and matching it to a company that offers underwriting that favors you.
Step one in this process is easy if you have a perfect driving record— the answers to these questions are always simply “no.” If you are not certain, the easiest way to find out exactly what is on your driving records is simply to order a motor vehicle report (MVR)* from your local DMV. You may be charged a nominal fee, but it will certainly be worth that small cost, because when it comes to this area, knowledge is both power and money. ▪ Knowing your exact driving history and accident report is crucial, because of the “discovery truth indicator” (DTI*) that will lower your tier, as explained in the next section.
▪ Discovery Truth Indicator ▪
Also known as “liar liar, pants on fire,” this is a re-tiering that is applied to you if information is found on the underwriting reports that contradicts what you have disclosed. In other words, failing to disclose accidents and violations will result in higher premiums when the occurrences are “discovered” during the underwriting process.
Many people who are not aware of this will call in and say, “just run my reports, you’ll find everything.” However, simply not disclosing the correct information will definitely cost you extra premium. Your strategy here is to avoid this at all costs, by obtaining a copy of your MVR and accident history before you quote your policy.
This “failure to disclose” penalty can be as much as 15% or more, and it is highly controversial, even among agents. It can penalize decent people who legitimately were unsure of whether that ticket for speeding was 2 years and 10 months ago, or 3 years and 2 months.
Listing the ticket will usually result in the driver being rated for it, whether or not it comes up on the reports, the logic being that, “they know something the system doesn’t know,” or some such nonsense. If their records are clear, then I have just surcharged them by 10% or more. If I don’t list it, and it is on the reports, I will have caused a rate increase of 15% or more. A no-win situation, in either case.
On the bright side, if this happens to you with one company (your rate suddenly increases substantially when quoting) ask the agent why, or look deeper into the quote program where it will explain why this occurred. (“ You told us this, we found that.”) If possible, ask the agent to tell you exactly what was found on the accident and MVR reports, including dates and amounts of claims, then take this knowledge to another company for a quote, where you will not be charged this penalty.