Do car insurance companies share information?

Car insurance companies share information using the CLUE database, which contains data about drivers' policies, claims, and driving histories.

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UPDATED: May 4, 2022

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Written By: Laura BerryReviewed By: Joel OhmanUPDATED: May 4, 2022Fact Checked

Here's what you need to know...

  • When you apply for insurance, the company you’re applying with will run several inquiries to verify information
  • If you’re just soliciting quotes, it’s not common for companies to run verification reports because it costs money
  • Almost all of the big-name car insurers communicate with each other by reporting information in the CLUE database
  • The CLUE database includes information on policies carried the by applicant, claims, and cancellations
  • Some carriers will ask the applicant to request a Claims History letter if you claim that the CLUE report has an error

Car insurance companies compete against one another for market share. Most companies want to acquire the most market share, but there are a few that care less about market share and more about premiums.

Unlike some other competitors who focus on keeping information on their clients secret, competitors in the insurance marketplace share information.

Car insurance carriers don’t just share information to be nice. By entering relevant rating information into an exchange database, every company benefits.

In fact, many state departments that oversee the insurance division require any carrier licensed to sell products to report a minimum amount of information to a database used nationwide.

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Why does sharing information benefit all insurance companies?

Insurance companies aren’t going to voluntarily give their competitor information on how to contact their customers. This practice wouldn’t make much sense.

However, it does make sense for all of the providers to share information after the customer has already started to solicit quotes.

It’s beneficial for all insurers to voluntarily participate in an information exchange because it helps the company that’s reviewing the application charge the right rates.

The underwriter who has the file on their desk will be able to see if the applicant has been honest or if rating factors need to be changed. Since all companies have access to the same system, it evens the playing field.

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What types of rating factors are affected by reports?

There are more than just a couple rating factors that companies use when they are coming up with your final rate. Some of the factors are well known but there are also other factors that consumers have no clue have an effect on rates.

If someone is dishonest in their application because they want to try and save money, they could be taken by surprise when their quote goes up by 20 or 40 percent.

Not everything is verifiable but companies can find out a lot more than an applicant may know.

Some factors that can be affected by details on verification reports include:

  • At-fault accidents that are still chargeable but weren’t listed on the application
  • Multiple non-fault accidents that can change risk class from preferred to standard
  • Drivers who’ve had claims in the insured vehicle but aren’t listed on the new application
  • Cancellation dates that show that the policyholder had a lapse in coverage
  • Inception and cancellation date that represents how long the insured has been with the carrier

What type of system do car insurance companies report to?

Auto insurance carriers report to a database that’s called C.L.U.E. The acronym stands for Claims Loss Underwriting Exchange.

The database can be accessed by all carriers with accounts and by drivers who order their own personal records.

Generally speaking, a C.L.U.E. record is updated when claims are filed, settled, and closed.

Does ordering a C.L.U.E. report cost the insurer money?

It would be nice for the insurer that is conducting business if ordering a C.L.U.E. report was free.

Unfortunately for companies, the agency in charge of reporting this consumer information, which goes by the name LexisNexis, is a for-profit company that makes more maintaining and reporting information.

This is why all companies have to pay for records.

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How do car insurance companies order C.L.U.E. records?

Ordering the actual record isn’t difficult at all. Some companies will give their agents the authority to order C.L.U.E. reports as they are finalizing an application.

Other carriers only hand over authority to run these reports to the underwriters who assess the applications.

Carriers will have an internal system to order records. Many times, the system is built into the quoting tool to ensure that everything is pre-populated into the report request easily.

The form may ask for the policyholder name, address, vehicle identification number, and/or a driver’s license number. If you’re ordering your own report, you can order it online or by mail.

What happens if the information on the report is incorrect?

Mistakes are made from time to time. If the person in charge of inputting information accidentally labels an accident as at-fault instead of not at fault, the policyholder could face some hassles when they switch companies.

Since carriers have to go by what’s on the record, they will have to request paperwork to change what’s already in the file.

In most cases, the insurance company verifying the application will ask one or both of the policyholders on file to get paperwork from the old carrier saying that the record is an error.

If you’re trying to get the file updated, ask the company that reported the information for a Letter of Experience. Keep copies of this letter so you always have proof.

What other information will the car insurance company verify?

Verifiable information goes past the information that the old carrier can provide. Companies also need to check each driver’s motor vehicle record to see if there are unlisted infractions.

If you have a minor infraction within the last 36 months or a major violation within the past 5 to 7 years, all of that needs to be disclosed.

In states where credit is used to make decisions on insurance premiums, the carriers will order credit-based insurance scores. Just like the C.L.U.E reports, the requests need to be made through LexisNexis.

The score can affect the policyholder’s rate.

Be honest when you’re filling out your application. It’s even important to enter all of your information accurately in the quote form.

If you want to get instant quotes right now, use an online brokerage style tool for free and you can compare the rates through all of the biggest competitors.

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Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Written by Laura Berry
Former Insurance Agent Laura Berry

Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP® Joel Ohman

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