No matter how experienced you are as a driver, South African roads can be unpredictable. Also, no one knows how moody the weather can get or when a riot might break out, given the population and diversity of our country. Which is why, having a car insurance policy, especially a comprehensive one, is essential. It can cover you against accidents, fire, theft, natural calamity and third-party liability. A comprehensive policy offers financial assistance against personal as well as third-party liabilities and saves you from both mental stress and financial hassles.

Now, since car insurance companies cover huge financial risks of policy holders, before granting insurance coverage or processing a claim, they conduct thorough background checks on the potential policyholder to verify the information they have shared. And based on the background check reports, insurance companies either accept or reject insurance applications and claims.

Let’s take a look at why car insurance background checks are performed and how they are done.

1. Profile authenticity:

Some people create fake profiles to buy car insurance policies. They then raise false claims to enjoy financial benefits even without suffering any damage or injury. This is what makes it important for insurance companies to perform background checks on prospective policyholders. Background checks help confirm the identity of the policyholder and the insurance company knows that they are issuing the policy to a legitimate person

2. Information authenticity:

When filing an insurance claim, some car owners may provide incorrect information to the insurance company to enjoy more financial benefits. For instance, when claiming for a recent accident, a policyholder may include old damages. Insurance companies do not cover multiple events, and hence, claiming old damages with the new one is not allowed. Certain policy holders may even approach insurance companies with fake claims.

3. Fraud cases:

Some policy holders create a car theft-like situation and file a claim with the insurance company for the total value of the car. Such cases can involve serious legal actions against the offenders.

4. Driving behavior or background checks:

Before issuing a car insurance policy, the insurance company also checks the driving behavior of the potential policy holder and adjusts premium prices accordingly. A person who files claims often may have to pay higher premiums compared to those who file claims occasionally.

6. Identity theft:

There have been instances when certain fraudsters used the identity of car owners, bought car insurance, and made fake claims. To avoid such hassles in the future, insurance companies conduct necessary background checks.

What all do insurance companies verify during background checks?

Car owner’s information:

The insurance company checks the basic information of a car owner, such as name, residential proof, ID proof and more.

Car details:

The insurer also checks car details, like the car make and model, manufacturing year, registration details, etc.

Credit report:

Many insurance companies approach credit rating agencies to get a credit report of the prospective car insurance policyholders. This report is an important document that says a lot about the financial health of the policyholder.

Driving record:

This is important to know if the car owner is a responsible driver or not. A person with a history of many traffic violations, accidents, license suspensions and more may have to pay higher premiums for their car insurance policy.

Criminal record:

This is a serious point to consider during background checks. Insurance companies may not provide insurance coverage to someone with criminal records.