Auto Insurance: Why Only Check Back 3 Years?

When it comes to determining insurance rates, car insurance companies typically look back on an individual's driving record, taking into account any violations and claims made within a certain timeframe. While some companies may go back as far as 10 years, there are a number of notable car insurance providers that only review the past 2 to 3 years, including Progressive and State Farm. This practice is influenced by state requirements, the belief that a driver's risk level changes slowly over time, and the fact that some events, like accidents and violations, may be removed from a driver's record after 3 years in certain states.

Progressive and State Farm are two of the best car insurance companies that only look back three years

Both Progressive and State Farm are well-known and established car insurance companies. State Farm is the largest car insurance company in the country, while Progressive is the third largest. State Farm has been in business for over 100 years, and Progressive has been operating since 1937. Both companies offer affordable rates and a variety of coverage options, including standard coverages such as bodily injury and property damage liability insurance, as well as optional coverages.

When it comes to pricing, Progressive typically offers lower rates for most driver profiles, especially those with a poor credit score or a DUI on their record. State Farm, on the other hand, tends to have cheaper rates for teen drivers, young adults, adults, and seniors. State Farm also offers lower rates for drivers with a clean driving record, a speeding ticket, or an accident on their record.

In terms of customer satisfaction, both companies received similar ratings, with complaint levels below the national average. However, State Farm performed better than Progressive in J.D. Power customer satisfaction studies. State Farm also ranked higher than Progressive in the 2023 U.S. Insurance Shopping Study and the 2023 U.S. Auto Claims Satisfaction Study.

When choosing between Progressive and State Farm, it is important to consider your specific coverage needs, driving history, and budget. Both companies have their strengths and weaknesses, so it is recommended to compare quotes and coverage options before making a decision.

State laws may limit how far insurance companies can look back

State laws may limit how far back insurance companies can look into a person's driving record. For instance, Virginia and Washington require auto insurance companies to disregard driving-record information that is more than three years old. On the other hand, states like Massachusetts and California allow insurance companies to look back up to ten years.

In addition to state laws, the number of years insurance companies can look back also depends on the type of violation. For major violations and claims, some companies will look back as far as five to ten years. For minor moving violations, insurance companies typically look back two to three years.

It is worth noting that even if an insurance company only looks back a few years, they can still access up to seven years of a person's claims and driving history through a database called the Comprehensive Loss Underwriting Exchange (CLUE).

Car insurance companies look back at your driving record to determine risk

When you apply for car insurance, the company will want to know how much of a risk you pose. That's why they check your driving record. They will check for a history of speeding tickets, at-fault accidents, and DUIs. Driving behaviours like these increase your risk as a driver, which leads to higher insurance rates.

Most car insurance companies look back at your driving record for the previous three to five years when setting insurance rates. However, this can vary depending on the company and state regulations. Some states, like Virginia and Washington, require that auto insurance companies disregard driving record information that is more than three years old. In other states, such as Massachusetts and California, insurance companies can look back up to ten years.

Accidents and DUIs can result in you being placed in a high-risk pool and drive up your car insurance rates by 72% on average. If you have a DUI on your record, you can expect to pay more for car insurance, regardless of the state.

If you're concerned about how your driving history might impact your insurance rates, it's a good idea to compare insurance quotes from multiple companies. Progressive and State Farm are two notable examples of larger insurance companies that tend to only look back at the previous three years of a customer's driving record.

Accidents and DUIs place you in a high-risk pool

High-risk drivers are those who have experienced multiple at-fault accidents, have many traffic violations, or have been convicted of driving under the influence. Insurance companies view these drivers as more likely to need to submit a claim, and therefore charge much higher premiums.

DUIs are the fastest way to be labelled a high-risk driver, and insurance companies will consider you high-risk for at least 3 years. If you have multiple DUIs, you may remain in the high-risk pool until the last one drops off your record, which takes 5-10 years in most states.

If you are a high-risk driver, you will likely need to apply for an insurance policy through your state's assigned risk pool, also known as the residual market or assigned-risk market. This system spreads the risk of covering high-risk drivers among the state's insurance providers. While each state's assigned risk plan has its own criteria, motorists may be forced into the pool for violations such as reckless driving, moving violations, speeding tickets, and no insurance or inadequate coverage.

The cost of high-risk auto insurance varies depending on factors such as your driving record, age, vehicle, and coverage. However, it is always significantly more expensive than standard insurance.

Your driving history affects your car insurance rates

Your driving record is one of the biggest factors that determine your car insurance rates. Car insurance companies look at your driving history for the past three to five years, depending on your state and company. If you have caused a car accident or received traffic tickets, you will likely pay more for car insurance.

Insurance companies use your driving record to assess your risk level, i.e. how likely you are to file a car insurance claim. The lower your perceived risk, the better your car insurance rates. Minor violations, such as speeding tickets, will likely increase your insurance premiums by 10 to 15 percent. Major violations, such as DUIs, can increase your insurance rates by up to 72%. If you have a history of major violations, insurance companies may even refuse to provide you with a policy.

In addition to your driving record, insurance companies also consider your insurance history, age, driving experience, and other non-driving factors, such as your location and credit score.

If you have a poor driving history, you can work to improve it by practicing safe driving habits and avoiding transgressions like speeding. It may take a few years, but driving without any incidents will result in better car insurance rates.

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