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Definition
Insurance underwriting is the insurer's process of evaluating your risk to decide whether to issue a policy and at what premium. Underwriters review factors like your driving record, claims history, and—for property coverage—the condition of the home or building. Where state law permits, many insurers also use a credit-based insurance score as part of the calculation. The goal is to match your premium to the level of risk you represent, so lower-risk applicants generally pay less and higher-risk applicants pay more or may be declined. Underwriting can happen at the time you apply and again at renewal, and the exact factors and weights vary by state and by insurer. Some states restrict or prohibit certain factors, so what affects your rate in one state may not apply in another.
Also Known As
Risk assessment
Policy underwriting
Risk selection
Underwriting review
Used in Context
- After you submit your auto application, the underwriting team pulled your driving record and set your premium based on a recent at-fault accident.
- When a Dreamy Leads inquiry reaches an insurer, the home's roof age and prior claims feed directly into underwriting decisions.
- Her homeowners policy was flagged in underwriting because an inspection showed the property condition needed repairs before coverage could be issued.
What factors do underwriters look at?
Underwriters evaluate risk using factors like your driving record, claims history, and the condition of insured property. Where state law permits, they may also use a credit-based insurance score. The exact factors and how much each one counts vary by state and by insurer.
Can underwriting cause my application to be denied?
Yes. If underwriting determines your risk is too high based on factors like driving record, claims history, or property condition, an insurer may decline to issue a policy or offer it at a higher premium. Standards differ by state and by insurer.
Does my credit affect insurance underwriting?
It can, where state law permits. Many insurers use a credit-based insurance score as one underwriting factor. However, some states restrict or prohibit its use, so whether your credit affects your premium depends on where you live and the insurer's rules.
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