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What is underwriting?
It's how insurance companies look at your house, car, and personal history to determine if they will offer you a policy. Then, they use the information gathered during underwriting to help price your policy.
Each company has different underwriting rules that determine who they’ll sell a policy to.
When you are issued a policy, a company has 60 days to do more underwriting research. They could cancel your policy or change your premium depending on what they find. They must give you 10-days' notice if they cancel your policy.
Learn more about the CLUE report companies use to look at your claims history.
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What do home insurance companies look at?
Most companies consider these things during underwriting:
- Your home’s age and condition. Companies can’t turn you down just because of your home’s age or value, but they can charge you more.
- Your home’s replacement cost. This is how much your company has to pay to replace your old property with new materials.
- Construction materials. Claim costs tend to be higher for houses built completely of wood. They’re lower for houses built of brick or stone.
- Where you live. Companies might not write policies in certain areas where costs are higher for storms or crime.
- Your home’s occupancy. Companies might limit the types of policies they sell for houses that are vacant, unoccupied, leased, secondary, seasonal, or rented for short-term home-sharing.
- Availability of local fire protection. Companies check to see how close you are to a fire station.
- Your claims history. Your premiums might be higher if you’ve had claims in the past. Companies can’t charge you more for claims you file but they didn’t pay, calling your company and asking questions, claims for damage from weather, and certain appliance-related water damage claims.
- Your credit score. A company can’t turn you down based only on your credit but the company can consider your credit together with other factors. To find out which companies use credit scores, visit HelpInsure.com.
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What do auto insurance companies look at?
Most companies consider these things during underwriting:
- Your driving record and claims history. Some companies might refuse to sell you a policy if you’ve had certain accidents or gotten some tickets.
- Where you keep your car. People in cities are more likely to have accidents or have their cars stolen than people in rural areas. Companies might choose not to write policies or offer fewer policies in certain areas.
- The kind of car you have. Collision and comprehensive rates are highest for luxury, high-performance, and sports cars. Rates are also higher for cars that cost more to repair.
- How you use your car. Your rates will be higher if you drive your car to and from work or use it for business.
- Your credit score. A company can’t turn you down based only on your credit but the company can consider your credit together with other factors.To find out which companies use credit scores, visit HelpInsure.com.
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Want to shop for a policy?
If you're not happy with your policy or how much you're paying, shop around. You can start your search for a home or auto insurance company at HelpInsure.com to get sample estimates. Then call the companies you’re interested in to get price quotes.
Also consider calling an independent insurance agent. They can help make sure you’re comparing the same type and amount of coverage.
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