Finance Things

How Car Insurance Prices you Out

Nothing is constant in the car insurance world. While you might have your policy coverage set, the insurance machine is constantly recalculating risk and crunching the numbers. They are adjusting for claim frequency, repair costs, payouts, and regulatory constraints in your region. These are local and regional factors which are not within your control.

But aside from the algorithm, on an individual level, they're also pulling information about you from third-party data. You probably know about your credit score affecting your insurance rate, but there's a lesser known source called Comprehensive Loss Underwriting Exchange (CLUE), which has up to 7-years of your auto and property insurance history. Insurers use CLUE to decide your coverage cost. The problem is that CLUE is not infallible and could have inaccurate information. In many cases, an error in CLUE reporting will result in a silent rise in your car insurance cost.

Smart money gets new quotes on renewal

When an insurer starts to see higher expected payouts in a region, it looks to reduce exposure. They can't just stop doing business in a market as it would hurt their reputation. So instead, insurers intentionally raise prices on their existing customers in an effort to price them out of risk. This is usually silent process and just appears as a new number on your policy renewal.

For insurance companies, this creates a predictable outcome: passive customers who accept paying more for their risk or those who choose to leave coverage on their own. It's a win-win for insurers.

This is why you should always get a new quote before accepting your renewal. It will help you gather data and help you see if you're being priced out. And if you are, it might be a hint that the insurer wants to cover less of your region or that maybe something is wrong with your CLUE report.

How to check your CLUE report

Most auto insurers rely on external reporting systems when generating quotes. These commonly include consumer reporting agencies such as LexisNexis and the major credit bureaus. Data from these systems can influence your premium without any direct notification.

If that data is incorrect, your quotes can be inflated with little explanation. In many cases, the only signal you receive is a higher renewal price.

Under federal law, consumers are entitled to review this data.

You can request a Consumer Disclosure Report from LexisNexis Risk Solutions:
https://consumer.risk.lexisnexis.com

Inside this report, you may find:

The process is not instant. You’ll typically receive a mailed acknowledgment within several days before gaining access to the report. This is the same category of data insurers pull during underwriting, alongside motor vehicle records and other inputs.

Key Takeaways