One of the factors used to get you lower car insurance rates and additional discounts is the length of your prior continuous auto insurance history. Many car insurance companies give you significantly lower rates when you have one year, three years, & five years or more of current continuous car insurance coverage, making these anniversaries a great time to shop your auto & home insurance for lower rates. However, sometimes car insurance buyers don’t get the proper credit for the length of their insurance history.

My blog post today will give you tips to avoid mistakes & make sure the insurance companies quoting you give you the lowest price for which you qualify. If you don’t feel like reading the entire blog post, scroll down and read the points in bold for the most important auto insurance savings tips.

To qualify for standard auto insurance rates, insurance companies usually require you to have at least one year of continuous prior insurance with no lapse, until the start date of the new policy. This practice is common in all states, unless prohibited by law.

In the old days, insurance companies would require customers provide them a copy of their old insurance policy declarations page, or their renewal declarations page, to prove the length of their previous continuous insurance history. Providing proof of prior insurance could be cumbersome for companies requiring documentation to get discounts for 6 years of continuous coverage, needing proof going back 6 years.

Many customers had a hard time finding their current policy, or would send a copy of their car insurance bill, instead of the declarations page. However,  the proper documentation can be easily acquired from your old insurance companies, and your new agent can help you gather it.

These days, providing proof of previous insurance is much easier.

Many auto insurance companies today get your permission to order a Current Carrier Database report on you, which will document your prior auto insurance history, when you apply for car insurance or get a price quote. This report tells which car insurance companies have insured you in the past, and the dates you were insured.

For example, the report on me would state I am insured now with Company X from 11/2/2009, and my policy will expire 5/2/2012. I was insured with Company Y from 5/2/2008 to 11/2/2009, and Company Z from 5/2/2005 to 5/2/2008. This report is sufficient to document my 7 years of auto insurance history.

Although the Current Carrier Database report makes applying for auto insurance easier for the customer, agent, and insurance company, there are drawbacks which you need to know about, to avoid being charged higher rates in error.

Here is what you need to know to make sure you get proper credit for your insurance history, and tips about prior insurance, so you can get the lowest car insurance rates:

1. Know your state’s auto insurance law.

A few states, like California, do not allow the use of your car insurance history for eligibility or rating. In Oregon, you cannot be declined standard auto insurance if you have not had car insurance because you have not owned a car.

However, I live in Oregon, and went a few years without a car until I bought a new one in 2005. Although I did not have to get expensive nonstandard auto insurance, I paid higher rates because my lack of a recent insurance history meant I did not qualify for some discounts.

In 2008, once I had 3 years of current, continuous prior auto insurance history, some insurance companies quoted me rates much lower than the rate they quoted me the year before.

The lesson is, your state may have a law disallowing the use of prior insurance to qualify you for standard auto insurance, but insurance companies may still have a way to charge you higher rates without prior insurance.

2. The only prior car insurance history which counts is the continuous auto insurance coverage you have had going back from today.

I blogged previously explaining why your current insurance history is the history which is important to your car insurance company.

As I mentioned, I went without a car until I bought a new one in 2005. I sold my old car in 2003. When I applied for car insurance in 2005 for my new car, I had about a 2 year break in my insurance history.

However, I had about 8 years continuous auto insurance from 1995 until 2003. This prior auto insurance history does not matter to the insurance company for determining your eligibility or discounts.

Auto insurance companies may give you large discounts for having 3, 5, 6, or even 10 years of insurance history, but it is only your current history, going back from today, which counts.

You can have 20 years of continuous auto insurance history with no claims, accidents or tickets, but if it canceled yesterday, you won’t get a discount for the length of your insurance history, and may not qualify with many insurance companies due to the one day lapse.

Before you decide to drop your auto insurance, because your car is not running, it’s been sold, or you don’t have the money, consult your insurance company or agent to find out how the lapse will impact your rates when you get auto insurance again.

3. Know your auto insurance history: Don’t depend on the accuracy of the insurance history report ordered by the insurance company.

The Current Carrier Database Report has not only made the insurance agent’s job easier, it has made some agents lazier, and many agents too reliant on the accuracy of the report.

In many cases, this insurance history report is 100% accurate. But because it is frequently accurate, or has enough information to qualify you for the auto insurance policy (but without getting you the lowest rate for which you may be eligible), many agents fail to review it, or review it with you, to make sure it is not missing information which can get you a much lower rate.

Here is what can lead to higher rates:

A. Not all insurance companies report their customer’s insurance history to the current carrier database.

Also, insurance companies may stop reporting, and insurance companies not previously reporting may start reporting.

One major car insurance company did not report their customer’s insurance history to the vendor my insurance company used to get insurance history reports, then started providing the information.

You can’t depend on the insurance agent or insurance company quoting you to know whether the insurance companies you have insured with in the past are currently reporting your insurance history.
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A lot of agents get your permission to order the report, the results come back immediately, but the agent won’t check the report and depends on the computer system to determine your eligibility and price.

It’s happened to me. Going back to my insurance history I used above, Company Y, which insured me from 5/2/2008 to 11/2/2009, does not report data to the database used by the company providing the insurance history report.

Without this information, my insurance history report shows a gap in coverage from 5/2/2008 to 11/2/2009. I would get the credit for having continuous insurance from 11/2/2009 to now, but I would not get the credit for my continuous auto insurance from 5/2/2005, when I bought my car.

I had to take the initiative to explain this to agents quoting my car insurance, and it made a big difference in getting me a much lower price.

B. Auto insurance companies not only give you a discount for a long continuous insurance history, the rate may be even lower if you have a long history with your current insurance company.

Usually, if you have been with the same insurance company for a period of time, it is reported accurately to the database.

But a large insurance company has many subsidiary insurance companies, so sometimes you will move to another subsidiary company. If this happens to you, the insurance history report will list the subsidiary companies as two separate companies.

Insurance companies rules will differ, but you may be able to get credit for your time with both these subsidiary companies as if it was one insurance company.

For example, you have been with Company A for 10 years, but two years ago, your agent, with your permission moved you from Company A Insurance Company, to Company A Mutual Insurance company, to get you a better rate. Some insurance companies may be willing to rate you as having a 10 year history with one insurance company, rather than a 2 year history with your current insurance company subsidiary.

Sometimes you don’t have a choice about switching to a new subsidiary of a larger insurance company.

When my car was insured with Nationwide Insurance, Nationwide stopped offering auto insurance in my state from Nationwide Mutual Insurance Company, and started offering a new policy from Nationwide Insurance Company of America. They changed my policy to the new Nationwide company on my  renewal date.

Some insurance companies will treat this situation as insuring with one company, but you need to tell the insurance company quoting your auto insurance about the situation, to see if you can get a lower price quote because of it.

Here is what you need to do to make sure your insurance history report is accurate:

Have the insurance agent or company quoting you order the report and review the results for you: which insurance companies have you been insured with and for what dates, how long is your continuous insurance history, and have you had any lapses.

If the agent tells you that you have been continuously insured for the last 7 years with State Farm, and you know you have been insured with State Farm for 7 years, you are good to go.

But if you know you have been continuously insured with State Farm for 10 years, ask the agent if this makes a price difference.

If the agent tells you from 5/16/2010 to 11/16/2011 you did not have insurance, and you know you did, explain it to the agent.

If the agent tells you have been continuously insured for seven years — 5 years with one company — and your most recent 2 years with another insurance company, and you know these are two subsidiary companies of the same insurance company, discuss it with the agent. See if they can be treated as one company, if it gets you a better price.

Know your insurance history as best as you can, so you can correct any errors in your insurance history report,  but don’t worry if you don’t know the exact dates. The agent or insurance company quoting you can help you find out the details and get the documentation you need, if you like the price and you are willing to buy their insurance.

4. You don’t need to own a car to get a long, continuous insurance history

If you don’t own a car now, you’re thinking of going without a car, or if your car is not running, consider your options for keeping a continuous insurance history, before you cancel your auto insurance or let it lapse.

If your car is not running, or you think it will not be used for an extended period of time, some insurance companies will allow you to have comprehensive coverage only on the car, which is inexpensive, keeps your policy active, and maintains your continuous insurance coverage, which can save you a lot of money on car insurance when you start driving again.

If you don’t own a car, or you’re about to sell your car, consider being listed as a driver on a room mate’s or a relative’s auto insurance policy.

Listing you as a driver could mean higher rates, if you are under 25 or have activity on your driver’s license. But sometimes adding you as a driver can save your room mate or relative money.

Even if you don’t live with the person, if you regularly drive someone’s car, you can be listed as a driver on their car insurance policy.

Be careful, though — some insurance companies require all drivers living in one household be listed as drivers. So if you have recently moved back with your parents, unknown to your parent’s insurance company, the insurance company will most likely insist you be rated on the policy. If you have a poor driving record, you may get your parent’s auto insurance policy non-renewed.

If you have a DUI, reckless driving ticket, license suspension, more than one at fault accident, or other major driving offense, don’t bother trying to get added as an additional driver.

Your goal should be to have a long, continuous insurance history to get the best auto insurance rates. But your insurance history is only one of many factors used by insurance companies. Shopping your insurance every year with all the leading insurance companies, regardless of the length of your auto insurance history, is a great way to save money.

Are you getting lower auto insurance rates because of your prior continuous insurance history? Tell me about it. Please leave a comment on my facebook page. Follow me on Twitter for important insurance consumer news and new blog entries at CarInsWatch.