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In India, Why And How Do Two-Wheeler Insurance Background Checks Take Place?

Published On May 30, 2022, Updated On May 31, 2022

Learn how background checks for vehicle insurance work in India.

You must obtain at least third-party automotive insurance in India if you wish to drive without breaching the law. Car insurance firms are becoming increasingly exposed to cheaters and fraudsters, as their services are viewed as a type of financial service. To put it another way, before they can provide you coverage, insurance companies must prepare ahead and know everything there is to know about you or any other application. In addition, insurance businesses should always know who they are servicing in order to enhance their entire service. As a result, insurance firms run background checks on their clients regularly.

In India, Why And How Do Two-Wheeler Insurance Background Checks Take Place?

Why and How do Two-Wheeler Insurance Background Checks Take Place?

The following are the most commonly given reasons:

  • First and foremost, insurance firms must do background checks to verify that the policyholder is who they claim to be. This lets them confirm that the insurance they're selling is going to a real person who is legally obligated to carry vehicle insurance.
  • Background checks are also required to defend against fraud. Insurance firms have been known to receive fictitious third-party automobile insurance claims from persons with nefarious motivations.
  • Third, insurers must do background checks on policyholders to ensure they are not victims of identity theft. In the past, naive automobile owners have been defrauded of their money and personal information by using phone insurance.
  • Fourth, insurance companies run background checks to see if premiums may be changed based on a person's driving behavior. It is not a viable business strategy to charge the same premium to someone who files claims regularly as someone who only files claims on occasion. Background checks can aid in the prevention of this type of situation.
  • Fifth, insurance firms are obligated to observe local and international anti-money laundering and Know Your Customer legislation, which means they must do specific background checks on policyholders to avoid financial crimes such as money laundering.

Background Checks Are Frequently Performed By Insurance Companies

Automobile insurance firms that offer comprehensive, own damage, or third-party coverage do background checks on a variety of factors.

  • Your Personal Information

Insurance firms utilize personal information to verify the identity of persons submitting claims or signing up for a new car insurance plan. The checks are primarily conducted to ensure that insurance businesses, like any other financial services provider, follow KYC regulations. These can also help detect identity theft and prevent fraud.

  • Reports on Credit Score

The credit report of a person is a useful predictor of their financial health and spending patterns. Credit score services are provided by several credit rating firms, which are then used by a variety of financial institutions.

  • History of Offenses

Insurance companies examine them to ensure that the person filing the car insurance claim has not previously committed any fraud. Insurance firms, like any other financial services organization, are targeted by scammers. Insurance firms can ensure that they are not exposing themselves to fraud or giving policies to those who are legally ineligible to receive them by conducting criminal background checks.

  • The Origins of Driving

Insurance companies assess a person's services based on their driving history when they apply for car insurance. As a result, they'll need to run your driving record via a background check.

Take Away

To conclude, insurance firms respect your privacy and are only permitted to use the background information they gather for insurance-related purposes. These businesses have stringent privacy policies in place to secure your data. If you're starting from scratch, there's no need to be concerned about background checks.

Also read - Bike Insurance Claims Can Be Rejected for a Variety of Reasons


This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
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