Originally Posted by Josh
Ah ha. If you had led in with that you may have found this more helpful.
Carriers are more likely to give better rates to customers with prior coverage and the size of the gap matters. To take that a step further, they also will sometimes give discounts based on how long the customer was with their previous company, i.e., if a customer has been with State Farm for 10 years, Allstate will give them a better rate than if they switched to Geico for a few months then wanted to go to Allstate. Each company can have it's own rules, but that's something they take into consideration.
Insurance companies want to bid for your business if they think you will make them profitable. You just need to give them a reason to think you are. If they don't think you are, they will do a lower bid. All insurance companies do this, some are just more obvious than others. Personal lines in general is a lot less blatant about this than commercial lines.
If I was with SF, like Josh said, for 10 years and I made the switch to Allstate, then Allstate views this as a good thing. You were with SF for a while and show loyalty to a program and SF was able to make some money off you (since it takes a few years to do so), so Allstate will want to entice you to come on for that reason hoping you will do the same for them. They will also look at prior coverages as well for the same reason, and to count for how responsible you are as a driver. People with higher limits typically take better care as driving and of their finances and things like that, from what I see at least.
Now, imagine you were with SF for 6 months to a year, just enough time for a rate change or have underwriting ask for information that they didn't catch initially. Then you go to GEICO, find you don't like them, go to Nationwide, find you don't like them, and then go to Allstate, all in a 2-3 year period. Allstate has no idea how long you are going to stay, so they will charge more since they want to be profitable for the short time they have you.
Having no prior insurance is a red flag. If you are a new driver, you are rated high because you are likely to get into an accident since you don't know better. If you are an experienced driver it either means you couldn't afford a car or insurance payment, and are likely to drop again if something happens, or that you weren't able to drive for some reason. This could be because of a revoked license or something similar to that. Also, if you go a while without insurance then there is a likelihood for claims to show up to your new insurance company from the lapsed period of time. The insurance company is asked to handle those whether they should or not, which lead to investigations, time, and money they won't want to invest into this, so they will charge more for that to possibly happen or DENY you altogether as being a client of theirs. If you just flat out didn't drive, then you are a rusty driver?
Seriously though, if you are going to stop driving or don't have a car or something, SUSPEND the insurance (if applicable in your state.) The rates are next to nothing and it shows that you plan to keep the insurance and there won't be a lapse.
Hope this helps!
No Prior Insurance
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