Who exactly gets to say whether or not you qualify for car insurance from a certain provider? Car insurance judge is an unattractive title, so they are known as car insurance underwriters. In a nutshell, an insurance underwriter works for a certain insurance provider and has two main duties –to determine if a potential policyholder is insurable and price their policy if they do qualify. So, the writing part of underwriting comes from the fact they write out what the policy will entail and how much it will cost. They also have a role in the policy renewal process for existing policyholders. To understand what an insurance underwriter does or if you wish to enter that field, this post is for you.
The Job of Car Insurance Underwriters
The entire business of insurance is based on risk. Policyholders of not just car insurance but homeowners’, renters, and more are all surveyed by their risk and probability of having to file a claim. When a claim is filed, insurance companies aren’t exactly thrilled about having to payout. However, that’s their job and what they signed up for. That’s why insurance rates after claims are higher than before. Insurance underwriters are able to give an estimate on how likely someone is to file a claim and will either charge them a certain amount for coverage or deny them a policy altogether. Every insurance company has a different standard for what is an acceptable risk, so there is a variety of pricing and coverage options.
How Car Insurance Underwriters do Their Jobs
If you understand how the pricing of car insurance works, then you’ll have no problem understanding how car insurance underwriters do their jobs. There are several personal and vehicle factors that determine how much you spend on car insurance. These are different for everybody, and that’s why narrowing down insurance averages can be difficult. The following personal factors that car insurance underwriters will look at are:
- Age – It’s the most well-known fact about car insurance. Younger and newer drivers tend to have the highest insurance rates of them all. That is why teen drivers are often put on their parents’ existing policy. People tend to get their own insurance around age 26. It’s also at that point when car insurance rates begin to average out since you have more of driving history.
- Driving record – Naturally, your driving history outlined in your record will be looked at by underwriters. They are checking for any accidents and traffic violations to see if you have a history of them in order to gauge your risk. Safe drivers are always prioritized in the car insurance business and are usually rewarded because of it –more on that later.
- Past insurance history – Like markups of accidents and violations, you also have a record of all your past insurance claims. This is another important thing that underwriters may first inquire about. Again, the idea is that you don’t want to use your insurance a lot.
- Place of residence – A zip code tells an insurance underwriter about your area or neighborhood’s traffic patterns, population, and crime rates. These are all factors they need to look at the price of your policy. You typically won’t be turned away by an insurance provider for being from a certain area unless they don’t operate in that area.
What Car Insurance Underwriters Look at When it Comes to Vehicles
Cars obviously play an equally significant role in pricing auto insurance. Several people shop for cars with the insurance costs of certain ones in mind, in fact. Underwriters base their car valuations both on risk and value. Here is what they look at when it comes to cars:
- Make, and model – The kind of car you own will firstly be observed and considered by the underwriters. Luxury cars, like Porsche, for example, will naturally have higher rates than a make like Hyundai. This is often due to the car’s speed capabilities and the cost of repairs in the event of damage. Electric cars are notable for their higher insurance rates for this reason.
- Car age – Older cars tend to not require as much coverage as brand-new ones. This can be the case if the car is bought used. At the same time, an old car may have a proven track record of safety that can also lead to lower premiums than a new one.
- Replacement value – This refers to your car’s current value at any given point when you have ownership of it. How much coverage you carry is entirely based on your car’s value to replace and repair. There are several resources like the Kelly Blue Book you can use to gauge the value of your car.
What Car Insurance Underwriters Like to See
Now with all the technical knowledge of what car insurance underwriters are and do, here are some tips to get a more positive evaluation from them. While you can’t help certain factors like your age, the following you can:
- Be the safest driver you can be – This includes steering clear of accidents and traffic violations by making safe driving a regular habit. There are plenty of resources that can help with this –like defensive driving courses. Underwriters will make a note of that and may even cut you the defensive driving discount. Safe drivers are always awarded discounts by insurance providers and pay the lowest rates.
- Maintain a good credit score – According to reports, insurance companies do look at potential customers’ credit scores to gauge how financially reliable they are. After all, car insurance is all about making your monthly payments on time. Having a good credit score will more than increase your likelihood of an underwriter’s approval.
Other Kinds of Insurance Underwriting
Homeowners’ and life insurance is another example of an underwriting process. Like with car insurance, underwriters will look at risks concerning homes and health like materials used to build the house, local crime rates, climate, family health history, and even specific things like how close you are to the nearest fire or police station. In conclusion, the job of an insurance underwriter is to think of everything that can and will go wrong and the likelihood of it happening, whether it’s in the car, at home, or health-related.
