If you want to acquire vehicle insurance in India, you must first understand why and how insurance firms do background checks.
Car insurance provides financial protection to car owners in the event of damage caused by an accident, theft, or man-made or natural disasters. As a result, this sort of insurance qualifies as a financial product. As a result, insurance firms occasionally run across bogus claims being filed. To combat this, insurers are now doing auto insurance background checks to ensure that the information supplied by the vehicle owner is accurate.
A background check is performed prior to the issuance of a car insurance policy to verify the information provided by the vehicle owner.
Why is a Car Insurance Background Check Performed?
Fake Profile Detection:
People have been known to construct phoney accounts in order to obtain vehicle insurance coverage. A claim is then filed based on these characteristics, despite the fact that no injury, accident, or damage has occurred in real life. Checking and identifying phoney profiles assists the insurance provider in determining that the policy they are offering is for a legitimate car owner who is currently driving his vehicle.
A Serious Fraud Case:
Insurance companies have seen cases when people fabricate a car theft situation and then file a claim for it.
Spreading False Information:
Insurance companies frequently encounter car owners who file false claims for losses that occurred in the past. For example, Ram, a client of an insurance company, filed a claim for old window damage that happened two years earlier during a recent accident. In such instances, insurance firms must exercise caution before approving a claim.
Car Insurance Background Checks for a Variety of Reasons
A few reasons why vehicle insurance firms run a background check are listed below.
Before granting a vehicle insurance policy to a consumer, the IRDA has made it essential for auto insurance providers to conduct domestic and international anti-money laundering and KYC checks. This guarantees that the insurance is provided to the rightful owner of the vehicle. In the past, unwary automobile owners have been duped by fraudsters posing as them in order to acquire car insurance. The scammers then file a claim, unaware that the original automobile owner is involved in the process. As a result, background checks assist the insurance business in confirming that no identity theft has occurred.
Customers’ driving habits are used by insurance firms to determine premiums. It’s not a smart idea to charge the same amount of premium to a vehicle owner who makes a lot of claims and the same amount to a vehicle owner who makes no claims. As a result, doing a background check minimises the likelihood of false claims being made.
Insurance companies have encountered situations in which a third party has filed a claim against a customer’s coverage. Because there is no KYC procedure in this scenario, doing a background check aids the insurance firm in avoiding fraudulent claims.
Background Checks are conducted by insurance companies using the following methods
Insurance companies scrutinise the paperwork and data listed below to guarantee that no fraudulent claims are submitted, even if you purchase vehicle insurance online.
The vehicle owner’s information is as follows:
This is accomplished through a KYC check, in which the car owner’s name and address are validated.
The policyholder’s driving record is examined to guarantee that the car owner is a safe and responsible driver.
If the car owner is involved in a criminal case, the insurance provider may refuse to provide coverage.
The manufacturer and type of the vehicle, as well as the registration information and the year of manufacture, are all checked.
Details of the previous policy:
When you renew your auto insurance, the insurer will ask for past policy data to check the information you provided, such as claim history, policy type, and so on.
Because automobile insurance entails significant financial coverage, a background check is necessary for the insurance company to guarantee that the appropriate individual is covered according to the policy’s terms and conditions.