In September, Carfax secured two patents for its approaches and systems using vehiclehistory data to help auto insurance companies better evaluate hazard and cost policies. In a press release, Carfax said hundreds of businesses are using Carfax’s technology.
Carfax spokesman Chris Basso declined to be more specific in the numbers or identify users. To date, 43 states have approved the utilization of Carfax vehiclehistory info for underwriting or establishing rates, he notes.
An exact mileage reading
The automobile history contains odometer readings, which is often used to estimate how many miles you drive your car every year.
“It is up to the individual insurance providers to determine whether to include mileage for a rating factor and just how much weight to give it,” Basso says,
“But anecdotally, we understand that the majority of our insurance customers utilize the mileage readings reported to Carfax as portion of their rating procedure.”
Vehicle history and auto insurance ratesMost auto insurance providers rely on customers to report every year how many miles they drive. But the Carfax report regularly is more precise, Basso says.
Insurers increasingly are using driving data to link costs more closely to vehicles and motorists. Some insurance companies have been asking policyholders who desire better auto insurance rates to install monitoring devices within their cars to more accurately evaluate mpg and driving habits.
“But the amount of consumers willing to install monitoring devices within their cars still is quite little,” Basso says. That’s the reason a vehicle’s history can become an useful tool that a growing number of insurers will use, he says.
The rise of use-based car insurance.”
Carfax collects info for insurers that helps them to better determine what issues in an automobile’s past might affect its security and operation, Basso says. “Insurers can use this info to make more knowledgeable decisions about danger and possibility for subsequent claims.”
For example, a Carfax report will suggest whether the auto’s airbag was ever deployed or whether its framework was ever seriously damaged.
Cars which have been involved in serious crashes still appear on dealers’ lots.
Such vehicles often have much more intense and a higher claim frequency damage than other vehicles, insurance industry analyses demonstrate.
It uses vehicle information from more than 34, 000 sources, including several police departments and all state motor vehicle departments, service facilities and collision centers.
The “like new” argument
Russ Rader, representative for the Insurance Institute for Highway Safety, says that simply because a car has an injury history does not mean its structural integrity was compromised. Autos could be fixed “like new,” he says.
Some automakers complain that if repair shops do not utilize the first manufacturer’s components, repairs do not hold up, he says. However, the institute’s studies demonstrate that lots of car parts can be reverse engineered “to match the functionality of the original equipment components” at a lower cost.