Insurance Brokers

When Background Reports Get It Wrong: What Auto Insurance Brokers Need to Know

As an auto insurance broker, you rely on data to quote accurately and submit complete applications. But what happens when the data is wrong?

For many consumers, a flawed background or credit report can be the silent reason behind denied coverage, inflated premiums, or unexplained underwriting decisions. And for brokers, it creates unnecessary friction, rework, and–potentially–reputational or legal exposure.

Some of the most damaging errors occur in third-party reports that many clients have never heard of but are critical to insurance underwriting: CLUE reports and LexisNexis risk data.

Where the Errors Start: CLUE, LexisNexis, and Other Third-Party Data Sources

Most brokers are familiar with the CLUE Auto Report (Comprehensive Loss Underwriting Exchange) – an industry database maintained by LexisNexis that tracks a consumer’s auto insurance claims history for up to seven years.

But LexisNexis doesn’t stop there. They also compile and sell reports containing:

• Past insurance coverage and lapse data;
• Property records;
• Address history;
• Traffic violations;
• Criminal records (where applicable);
• Bankruptcy, lien, and judgment data;
• Deceased status.

These reports are used by nearly every major insurer during the underwriting process. However, they’re not always accurate.

Common problems include:

• Mixed Files: Another person’s claims or criminal history ends up in your client’s file due to a similar name, SSN, or address;
• Outdated Data: Lapsed policies or incidents that should have expired under FCRA reporting limits are still included;
• Incorrect Deceased Notation: Your client is marked as deceased in LexisNexis or credit databases – immediately halting quotes or binding;
• Wrong Address or Vehicle Info: Coverage history is linked to the wrong person or location.

Your client may have no idea this information is being used against them – because these reports aren’t routinely disclosed.

What This Means for Brokers

You may not control the reporting process, but you’re the point of contact for the client. When something goes wrong, it reflects on your agency – even if you didn’t cause it.

Here’s what’s at stake if you don’t address these issues head-on:

Client Retention

Incorrect data can distort a risk profile, leading to uncompetitive quotes and losing the sale to another broker or agent. If a client is denied or quoted a much higher rate based on bad data, and you offer no path to resolution, they’ll move on. Not only that, they may leave negative feedback online or discourage others from working with you. If a client is told they’re deceased, or is denied coverage with no warning, it reflects poorly on your agency – even if you didn’t generate the report.

Operational Disruption

Errors in LexisNexis or CLUE data often trigger automated declines, especially if a client appears to have recent claims, gaps in coverage, or a criminal background they don’t actually have. When carriers reject applications due to errors, your team spends extra time re-quoting, explaining, and apologizing. That’s time lost on productive work.

Compliance Concerns

If background or credit data leads to denial, and your client isn’t notified properly, Fair Credit Reporting Act (FCRA) violations may come into play. If you or a partner agency used a report for underwriting, you may have a role in the compliance chain.

Legal and Compliance Exposure

When reports like CLUE or LexisNexis are used in underwriting, the Fair Credit Reporting Act (FCRA) applies. That means:

• The consumer has a right to a copy of the report if adverse action is taken.
• They must be given a chance to dispute inaccurate information.
• You or the carrier must send a pre-adverse action notice (in many cases).

Failing to follow these procedures can expose your agency or carrier partners to legal liability under 15 U.S.C. § 1681b(b)(3) and other FCRA sections.

How to Identify When There’s a Problem

If you encounter any of the following, it’s time to look closer:

• A quote comes back significantly higher than expected, without explanation.
• An application is denied, even for clients with clean records and continuous coverage.
• A carrier states the applicant is listed as deceased in their systems.
• A client is denied coverage due to "undisclosed" claims they insist they never filed.
• The client tells you they’ve had other financial institutions raise similar flags recently.

These are all signs of possible errors in LexisNexis or CLUE reports – or even in their credit file, which some insurers still reference for rating purposes.

What You Can Do as a Broker

You’re not responsible for the data, but your role as a trusted advisor makes you the first (and often only) person your client will turn to.

Here’s how you can help:

1. Inform the Client

   Explain that insurance companies may be relying on third-party data they haven’t seen. Recommend that they request copies of:

   • Their CLUE Auto Report from LexisNexis: Request it here;
   • Their LexisNexis Full File Disclosure;
   • Their credit report from the three major bureaus (especially if pricing seems off).

2. Flag Suspicious Outcomes

   If a client is denied due to being “deceased” or linked to prior claims they dispute, help them identify the source of the information and gather proof of the error (e.g., ID, DMV records, prior policy declarations).

3. Refer to Legal Support When Needed

   When the client encounters serious errors – especially ones that lead to denial or inflated pricing – they may need to escalate.

   At Consumer Attorneys PLLC, we help individuals correct errors in LexisNexis, CLUE, and credit reports. They also represent clients in FCRA claims, especially when:

   • They’re reported as deceased and denied insurance or credit;
   • Their file contains someone else’s criminal or claims history;
   • They’re not given a chance to dispute adverse findings before a denial.

Supporting Clients Helps Your Practice

You don’t need to become a legal expert. But by spotting errors and guiding clients to the right resources, you:

• Save policies that might otherwise be lost;
• Demonstrate your value beyond quoting and binding;
• Reduce churn from frustrated clients;
• Protect your reputation and mitigate risk.

When reports get it wrong, your clients need more than a new quote – they need someone who knows where to send them.

Quick Links for Brokers

✅ Request CLUE Report
✅ LexisNexis Full File Disclosure 
✅ FCRA Legal Help: ConsumerAttorneys.com