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Car Insurance Background Check In India: Why & How?

Published On Dec 15, 2021

Car insurance companies provide an important service to motorists by financially protecting them in the event of an accident, theft, fire, or natural disaster.

In India, obtaining at least third-party automobile insurance is required if you wish to drive without running afoul of the law. Car insurance firms are now exposed to cheaters and fraudsters since their services might be considered as a type of financial service. That is to say, before they can provide you insurance, insurance companies must plan ahead and know everything important about you or any other candidate. Furthermore, insurance businesses should constantly know who they are servicing in order to enhance their overall service. As a result, insurance firms frequently conduct background checks on their clients.

Car Insurance Background Check In India: Why & How?

Why and How Car Insurance Companies Conduct Background Checks?

Some of the most common explanations are as follows:

  • First, insurance firms must conduct background checks to verify the policyholder's identification. This helps them to verify that the policy they're offering is going to a real person who is legally obligated to have vehicle insurance.
  • Second, background checks are required to defend against fraud. People with nefarious intentions have been known to approach insurance firms with false claims for third-party automobile insurance.
  • Third, insurance firms must do background checks on policyholders to ensure that they are not victims of identity theft. There have been instances where unwary automobile owners have been tricked out of their money and personal information by phone insurance.
  • Fourth, insurance firms do background checks to guarantee that premiums may be adjusted for individuals based on their driving habits. It is not a viable business strategy to charge the same premium to someone who files claims frequently and someone who files claims only sometimes. And background checks help to prevent this from happening.
  • Fifth, insurance firms are obligated to follow local and international anti-money laundering and Know Your Customer requirements, and as a result, are required to do specific background checks on policyholders in order to avoid crimes such as money laundering and other financial crimes.

Things That Insurance Companies Tend To Run Background Checks On

Insurance firms that offer comprehensive coverage, own damage coverage, or third-party car insurance do background checks on a variety of factors. Here's a rundown:

  • Personal Information

Insurance firms use personal information to verify the identification of persons who are submitting claims or enrolling for a new vehicle insurance plan. The checks are primarily performed to ensure that insurance businesses, like any other financial services provider, comply with applicable KYC regulations. These also aid in the identification of incidents of identity theft and the prevention of possible fraud.

  • Reports on Credit

A person's credit report is an excellent measure of their financial health and prudent financial behaviour. Credit score services are provided by a number of credit rating companies, which are then used by a number of financial institutions.

  • Criminal History

Insurance companies examine them to ensure that the person filing the CAR INSURANCE CLAIM has no history of fraud. Insurance firms, like any other financial services company, are routinely targeted by scammers. Insurance firms can ensure that they are not exposing themselves to fraud or giving policies to those who are legally unable to get them by conducting criminal background checks.

  • Driving History

Insurance firms provide their services on the basis of a person's driving history when they apply for CAR INSURANCE. As a result, it is critical that they do background checks on your driving history.

  • Information About the Car

It's only reasonable to do background checks for car information since it's the vehicle that's being insured in the first place.

Take Away

To sum up, insurance firms understand the value of your privacy and are obligated to utilize the background information they gather just for insurance-related purposes. These businesses have robust privacy policies in place to guarantee that your personal information is kept safe. As long as you have a clean slate, there is no need to be concerned about background checks.

Also Read: 

How To Lower Premium of Your Car Insurance?

Top Factors That Determine The Premium of Your Car Insurance Plan

Disclaimer: 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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