Your Auto Insurance Policy Rights

Department of Insurance protects the rights of insurance buyers. Infact, the Department of Insurance is concerned about the privacy and the protection of your legal rights involving personal insurance. Insurance contracts are mostly too complex and confusing to be understood by common people, especially to understand its nuisances. Therefore the department has clearly explained the rights and responsibilities of insurance buyers that must be respected by the insurance companies, brokers and agents.

Rights of insurance buyers can be divided into three groups as follows:

• Policy Rights
• Renewal and Cancellation Rights
• Premium Rights

Policy Rights:

• Type of information that can be obtained from you.
• Independent sources
• Disagreement with the information provided by the independent sources?
• Accessing your personal information

Type of information that can be obtained from you

While filling up the application, you are required to disclose certain personal information. This is required to assess your eligibility for insurance coverage and to calculate a price of coverage. For example, in case of automobile insurance you would be required to provide information such as driving record, use of automobile, mileage driven, and years of driving experience. In this case, almost all of the insurance companies will order a Motor Vehicle Report (MVR) for all the drivers listed on the insurance application. 

MVR is the official driving information compiled, generated and kept by the Department of Motor Vehicles (DMV). MVR is the most authentic tool to verify accidents, traffic violations and license suspensions for all potential drivers listed on the application.

In case of unsatisfied judgements, license suspensions, major convictions and failure to have liability coverage at the time of an accident, California Insurance Proof Certificate filing is required. This is filed by your insurance company with the DMV. The filing requirement period can be up to three years. Note that traffic offence related major convictions such as hit and run, driving under influence, reckless driving etc. remains on the record for seven years from the violation date. On the other hand, minor convictions remain for three years.

Please note that SR22 is different from SR1. SR1 is the form for California Traffic Accident Report. In case of any accident, DMV rules require you to file SR1 within 10 days from the date of the accident, in case of any bodily injury, or property damage that exceeds $500 ($750 as of 1/1/03).

Independent Sources

Insurance companies use independent sources such as CLUE and ADD reports, procured from consumer reporting agencies to underwrite insurance policies. This is in addition to the Motor Vehicle Report.

Comprehensive Loss Underwriting Exchange (CLUE) is a claims history report. It helps insurance companies in exchanging their claims records on drivers and vehicles. How does it help the insurance company? After you apply for a new automobile policy, your insurance company may get this report to verify the validity of the claims history as you mentioned on the application.

However, there is a difference between this report and MVR- This report reflects comprehensive losses or accidents valued below $500 ($750 as of 1/1/03) that may not appear on your MVR.

Additional Driver Discovery Report (ADD) gives details of all licensed drivers who live or previously lived in your household at any time. Insurance companies obtain this report to evaluate the increased liability exposure, if any, due to any undisclosed driver/s in the household. 

Disagreement with the information provided by the independent sources?

If your insurance company takes any action against you such as refusing an application for insurance on the basis of a report provided by an independent source, it must inform you. You must also receive the contact details of the credit bureau that provided the report. The contact details, to be provided by the insurance company, may include information such as name, address, phone number etc.

The Fair Credit Reporting Act provides you the right to dispute the accuracy or completeness of any information offered by the credit-reporting agency. You also have the right to receive a free copy of the report from the credit-reporting agency. Such free copy must be provided to you by the reporting agency within sixty days of your request.

The credit reporting agency is also required to remove or correct inaccurate or unverified information. This correction must be done within thirty days after you dispute it. However, the credit-reporting agency is not required to remove accurate data from your file unless it cannot be verified.

Accessing your personal information

Maintaining privacy and secrecy of the information collected by the company is the responsibility of the company. The company can use this information for issuing, servicing and continuing insurance policies, and processing claims. However, some persons or organizations may have access to your information. These include:

• Your insurance agent or broker .
• Persons performing a business function for the company: example, auditors.
• Independent or Public Adjusters.
• Actuarial or research organizations conducting statistical or research studies provided they maintain your anonymity.
• Other companies with which your company is affiliated.
• Non-affiliated persons or organizations for marketing purposes. However, you may indicate in writing if you do not want the information to be disclosed for such purposes. You may do this when you apply for coverage.