Keeping secrets from your spouse or kids -- such as planning a surprise birthday party -- can be fun. But problems like traffic tickets, auto accidents and financial woes can cause a lot of unhappiness at home, especially if you're being hush-hush about them.
Some of the most common "secrets" that affect auto insurance rates and that consumers try to hide are:
• Traffic tickets. A driver in his late teens or early 20s who’s still on Mom and Dad’s auto insurance policy gets nabbed by the cops and tries to hide the traffic ticket from his parents. In another scenario, a spouse with a lead foot hopes to avoid “another lecture” about his driving, so he keeps his speeding tickets a secret. • Auto accidents. Someone gets into a minor fender-bender with little to no obvious damage to his or her own car. But the other driver's car needs to be repaired. The at-fault spouse fails to tell the "other half" about the crash. • Financial woes. One too many shopping splurges leads to a dinged credit score. Hoping the score will rebound soon, the shopaholic doesn't whisper a word about this financial failing -- a situation that could affect your auto insurance premium.
Esther Tanez, an insurance agent at ESTIR Inc. in New Jersey, says keeping an insurance secret from a spouse, parent or other person on an auto insurance policy is possible, but it’s never a good idea.
Here’s a look at the most common car insurance-related “secrets,” and what effect they have on your rates.
Since only moving violations and DUIs show up on the driving records that insurers review to determine rates, Tanez says, it's possible to keep a traffic ticket secret. Your auto insurance company will know about a traffic ticket only if the infraction results in points on your driving record -- kind of like a bad grade on a report card.
Point systems for moving violations vary from state to state. The worse the offense, the more points you’re assessed. For instance, speeding may come with a two- to three-point penalty, while drunken driving may cost you six points.
Parking tickets and other non-moving violations like not wearing a seat belt or not parking properly can remain hush-hush at your house, as long as the penalties are paid on time. The good news: Your insurance company won't even know about them.
Moving violations, however, are a different story. Auto insurance companies easily can learn about these.
“It's not uncommon for me to break the news that a family member has received a DUI because someone calls to inquire about the policy,” says Brian Rauber, a Farmers Insurance agent in Missouri.
One moving violation could trigger a 10 percent to 20 percent bump in your premium, Rauber says.
Rauber says an auto accident is harder to hide -- but not impossible.
“If the at-fault driver uses a mobile phone as a contact regarding the claim, all he has to do is beat family members to the mailbox to intercept paperwork and keep them none the wiser about the accident -- for a while,” Rauber says.
But the jig is up when your policy is renewed. Translation: Your premium could rise by an average of 20 percent to 40 percent after an at-fault accident, according to Rauber.
“Accident claims can cause an increase from an average of $150 to hundreds of dollars,” Tanez says. A spouse has the right to know everything about a shared auto insurance policy, she says, "so when they call to find out why the premium went up, they’ll learn about the accident.”
Any "named insured" -- not just a spouse -- can inquire about a policy, Rauber says. So if your teen or adult child tries to hide a claim that your car insurance policy covered, you're entitled to find out the details.
Changes in the insurance industry have made it tougher to sweep tickets and crashes under the rug. In the past, each car in a household had its own policy, with the premium being assigned to whoever drove a certain vehicle. Under that setup, a driver could pretty easily conceal a ticket or accident from everyone else at home.
These days, many auto insurers put several vehicles and drivers in one household under one policy number. In this situation, the premium for the entire policy would climb if just one person racks up a ticket or an at-fault accident, according to Rauber.
Furthermore, Rauber says, auto insurers no longer assume that every motorist in a household drives just his or her vehicle. Insurers now assume that all drivers get behind the wheel of all of the household's vehicles, and the insurance risk "is spread on a household level across each vehicle,” Rauber says.
Hiding a financial blunder or low credit score doesn’t pay, either. Insurance companies tap your credit history along with your age, your driving history and other information when you're applying for or renewing your auto insurance. So when one spouse or partner notices that the auto insurance premium has spiked, a call to the insurance agent or company probably will reveal the financial slip-up.
Auto insurance rates go up when your credit score dips because the insurer equates that financial instability with a higher risk of crashing your car or filing a claim, according to Steve Brooks, president of B & B Premier Insurance Solutions in California.