Published January 8, 2024 at 11:00 AM PST | Reading time: 2 minutes
At Insurify, our goal is to help customers compare insurance products and find the best policy for them. We strive to provide open, honest, and unbiased information about the insurance products and services we review. Our hard-working team of data analysts, insurance experts, insurance agents, editors and writers, has put in thousands of hours of research to create the content found on our site.
We do receive compensation when a sale or referral occurs from many of the insurance providers and marketing partners on our site. That may impact which products we display and where they appear on our site. But it does not influence our meticulously researched editorial content, what we write about, or any reviews or recommendations we may make. We do not guarantee favorable reviews or any coverage at all in exchange for compensation.
Why you can trust Insurify: Comparing accurate insurance quotes should never put you at risk of spam. We earn an agent commission only if you buy a policy based on our quotes. Our editorial team follows a rigorous set of editorial standards and operates independently from our insurance partners. Learn more.
Auto insurers in New York will soon have to use third-party information to verify driving history when a consumer applies for a policy.
A new law requires insurance companies to use third-party information to verify driving history if the insurer uses a consumer’s driving record as a rating factor for quoting or underwriting an auto insurance policy. Gov. Kathy Hochul signed the bill into law in December 2023.
The law stipulates that insurers can’t finalize — “bind” — a policy or accept a down payment for a policy without first confirming the driver’s record through a third party.
Why lawmakers created the bill
Currently in New York — and other states — insurers can, and do, bind auto insurance policies based on initial quotes provided to consumers. These quotes rely on information provided by the applicants. Often, after binding the quote, the insurer raises the policyholder’s premiums if the information in the driver’s record is different from the information that created the initial quote.
In some cases, agents or insurers intentionally disregard an applicant’s driving history so they can provide a misleadingly low quote to secure the consumer’s business, legislators have said. “Requiring all carriers to run motor vehicle reports prior to binding coverage would guarantee the consumer will receive a fair and accurate quote prior to committing to the expense,” according to NYsenate.gov.
Intended impact for drivers
The bill aims to ensure drivers receive fair and accurate quotes before financially committing to a car insurance policy.
A driver’s motor vehicle record is one of many factors insurers consider when establishing a policyholder’s car insurance rates. When applying for a policy, drivers typically answer a series of questions about their driving history. Insurers or agents who don’t verify those answers before providing a quote may end up underestimating an applicant’s quote.
If the new law works as intended, drivers should receive more accurate quotes before making any down payment on a policy. It should also reduce the possibility of policyholders facing rate increases due to driving record discrepancies after they’ve purchased a policy.
And, since many insurance companies already run reports on driver records before binding a policy, the new law probably won’t slow down the quoting process for consumers, says Betsy Stella, Insurify’s vice president of carrier management and operations.
Potential effect on insurers
The new law may prove expensive for insurance companies, Stella says.
“This will likely increase costs for carriers on a per-application basis because they’ll be running reports even on customers who don’t buy,” she notes. “Previously, it may have been run post-bind, which means the carrier would have probably collected new business fees, as well as some premium.”
However, it won’t be difficult for insurance companies to find credible third-party information. Motor vehicle records in New York cost $7 each and are available to insurers, while CLUE reports — an exchange in which many carriers share loss data — costs about $20 each, Stella says.
“The key may be whether they can find less expensive sources that are indicative, rather than empirical, and reliable enough to allow them to make a ‘good faith effort’” as the new law requires, she adds. “The fact that the legislation doesn’t define the third parties gives insurers some latitude to test other sources, which is probably good from a cost perspective.”
The new law goes into effect on June 19, 2024. Insurers processing applications will have to begin making a “good faith effort” to verify driver records before accepting any money toward a policy.
Evelyn PimplaskarEditor-in-Chief, Director of Content
Evelyn Pimplaskar is Insurify’s director of content. With 30-plus years in content creation – including 10 years specializing in personal finance – Evelyn’s done everything from covering volatile local elections as a beat reporter to building fintech content libraries from the ground up.
Before joining Insurify, she was editor-in-chief at Credible, where she launched and developed the lending marketplace’s media partnership’s content initiative and managed the restructuring of the editorial team to enhance content production efficiency. Formerly, as tax editor for Credit Karma, Evelyn built a library of more than 300 educational articles on federal and state taxes, achieving triple-digit year-over-year growth in e-files from organic search.
Her early career included work as a content marketer, vice president and managing officer of a boutique public relations agency, chief copy editor for 14 weekly Forbes publications, reporting for large and mid-sized daily newspapers, and freelancing for the Associated Press.
Evelyn is passionate about creating personal finance content that distills complex topics into relatable, easy-to-understand stories. She believes great content helps empower readers with the information they need to make important personal finance decisions.