Why Do Car Insurance Companies Need Your SSN?

By Lillian Downey

  • Overview

    With identity theft on the rise, people are taking more steps to safeguard their personal information. This includes guarding their social security numbers, even from companies with whom they regularly do business. One smart move to protect your identity is to know exactly for what purpose companies are using your personal information. Auto insurance companies may use your social security number for various reasons.
  • To Verify Your Identity

    Your social security number is your unique identifier. It means, in most cases, that you are who you say you are. Insurance companies can use your social security number to verify that basic demographic information you provide them is true and accurate. These checks can identify your status as a legal citizen and a legal driver. It can be used to identify members of your household who may need to be included or excluded on your policy, and it can be used to determine if you have an outstanding balance with the company.
  • To Verify Your Credit

    The No. 1 reason car insurance companies use your social security number is to run a credit check. Your rates are based just as much on your credit score as they are on your driving record. Insurance companies want their money, just like any other business, and your history of timely payments will get you a better rate. If your credit score is too low or shows too many delinquent accounts, the insurance company can deny you coverage. Credit checks are attached to social security numbers, and therefore your number is needed in order to offer you a rate.
  • To Verify Your Driving Record

    Your social security number will likely be used to help the insurance company asses your driving record. Accidents, tickets and other traffic violations make you a higher-risk customer and will increase your rates, so insurance companies run thorough checks. They will look to see how many points you have on your license and how many violations you have had within a certain time. Drivers with better records are given the best rates, while drivers with more violations will likely have higher premiums. If your driving record indicates an inordinate number of violations or certain types of vehicular crimes, you can be denied coverage by the insurer and will have to find another company.
  • To Comply with State and Federal Laws

    Insurance companies are required to report some information to regulatory agencies about their customers and their business dealings. Because your social security number is your unique identifier, it may be used in this type of correspondence. The police may also subpoena your insurance records in cases of disputes, or in the course of an accident investigation or other matter. The insurance company may also have to report information about settlement payouts to the Internal Revenue Service. You may have a right to know more about his information, based on the company's privacy policy. Ask for a copy of the privacy policy, and ask about everything the agency uses your social security number for.
  • To Safeguard Your Information

    Finally, If you call your insurance company, it is likely to ask you for your policy number and your social security number to verify your identity. This protects your confidential information from being shared with strangers, and stops strangers from making changes to your account.
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