Insurance Underwriting Process

Filling out an insurance application at your local agent's office is only the beginning of a process. In many standard situations within the insurance industry, there are pre-loaded insurance underwriting guidelines that let an agent know whether or not you are a good risk for the company to take on. Number of claims, types of cars, ages of drivers in your household, and your driving record are all things that are usually pre-loaded into the agent's system. They enter your information and are told immediately if you are an acceptable risk and how much your policy should cost.

If you have a special situation, your agent may contact the underwriting department directly to go over your policy and determine if your special situation qualifies you for insurance with that company.

Some examples in which an insurance underwriter might make a judgment call on a policy's risk:

• A homeowner has an excluded breed (like a Pit Bull), but the dog has been through numerous obedience classes and works with children in an after-school program. The insurance underwriter may determine that this dog is no more of a risk than an allowed breed and will ask the insured to provide proof of the obedience class attendance. The insured may also be required to provide documentation of the dog's behavior, such as a letter from the after-school program. In a situation like this, the underwriter may insure the home or may insure the home and exclude the dog. That means that if the dog does bite someone or destroy property, it will be specifically excluded from the homeowner's liability insurance or property damage provisions.

• If a driver has a violation on his or her record, but attended driving school and is waiting for that entry to be removed from the driving record, the agent may call the insurance underwriting department and have them provide proof of that person's driving school attendance. This way, the rate can be the same as it would have been if the insured had never gotten the ticket. An underwriter understands that, if the offense is going to drop off in a month, it may behoove the insurance company to get the business now rather than wait a month for the insured to be a better risk.

Underwriters are given the guidelines for the company's profitability goals, and it is their job to protect the insurance company's book of business and only insure risks that are likely to make the insurance company money.

While underwriters do not make exceptions often, it does happen, and if you have a special situation, the determining factor may be your insurance agent's relationship with the insurance underwriting department.