What Do Insurance Underwriters Look For? Understanding How Insurers Evaluate Risk

You fill out an insurance application, answer a few questions, choose the coverage you need and then your application may head to an insurance underwriter.

But what exactly happens next?

Insurance underwriting is the process an insurance company uses to evaluate risk. An underwriter reviews information about the person, property, vehicle, or business being insured and helps the insurance company determine whether it can offer coverage and under what terms.

While the exact underwriting process varies by insurance company and type of coverage, understanding what underwriters look for can make the insurance process a little less mysterious.

What Is Insurance Underwriting?

Insurance underwriting is essentially a risk assessment.

When an insurance company agrees to insure a home, vehicle, business, or other asset, it is agreeing to take on a certain amount of financial risk. Underwriting helps the insurance company understand that risk before issuing or renewing a policy.

Depending on the situation, underwriting may help determine:

• Whether the insurance company will offer coverage
• What coverage options or limits are available
• Whether certain exclusions or conditions apply
• How the risk fits within the carrier’s underwriting guidelines
• What premium may be appropriate

Underwriters may use information provided on your application along with reports, records, inspections, automated underwriting tools, and other information permitted for that particular type of insurance.

What Do Home Insurance Underwriters Look For?

When underwriting homeowners insurance, the insurance company isn’t simply looking at the value of the house. It wants to understand the likelihood and potential cost of a future claim.

Factors may include the home’s age, construction, location, replacement cost, condition, prior claims, and certain property features.

The roof can be particularly important. Its age, material, and condition may affect whether a carrier is willing to insure the property or whether additional requirements apply.

Other characteristics, such as electrical systems, heating systems, plumbing, detached structures, wood-burning stoves, swimming pools, or other property features, may also be considered.

This is one reason an insurance company may request photos, documentation, or an inspection when you purchase or renew homeowners insurance.

What Do Auto Insurance Underwriters Look For?

Auto insurance presents a different set of risks.

Depending on the insurer and applicable state laws, underwriting may consider factors such as your driving history, claims history, vehicle, location, how the vehicle is used, and other permitted rating and underwriting information.

The vehicle itself matters, too. Repair costs, safety features, vehicle type, and other characteristics can influence the potential cost of a future claim.

This helps explain why two people—or even two vehicles in the same household—don’t necessarily have identical insurance costs.

What Do Business Insurance Underwriters Look For?

Business insurance can involve considerably more variables because no two businesses operate exactly alike.

An underwriter may want to understand what the company does, where it operates, how large it is, what property or equipment it owns, and what types of risks employees or customers encounter.

Depending on the coverage, an insurance company may ask about factors such as:

• Type of business and industry
• Years in operation
• Business location
• Building and property information
• Payroll or revenue
• Number of employees
• Vehicles and drivers
• Equipment
• Safety procedures
• Previous insurance claims
• Services or products provided

A contractor, retail store, professional office, manufacturer, and restaurant all face very different potential losses. Underwriting allows an insurer to evaluate those differences when determining appropriate coverage.

Why Is My Insurance Company Asking for More Information?

Getting an additional question from your insurance agent doesn’t necessarily mean something is wrong.

Sometimes an underwriter simply needs more information before making a decision.

For example, an insurer might request updated roof information for a home, clarification about how a vehicle is being used, photographs of a property, or additional details about a business’s operations.

Providing complete and accurate information can help prevent delays and gives the insurance company a clearer picture of the risk it is being asked to insure.

Can an Insurance Underwriter Deny Coverage?

Yes. An insurance company may determine that a particular risk does not meet its underwriting guidelines.

That doesn’t necessarily mean the person, home, vehicle, or business is “uninsurable.” Insurance companies have different underwriting guidelines and appetites for different types of risk.

This is one area where working with an independent insurance agency can be especially helpful.

Instead of representing only one insurance company, an independent agency can work with multiple carriers. If one company’s underwriting guidelines aren’t a good fit for a particular situation, there may be other options worth exploring.

Does Underwriting Affect Your Insurance Premium?

Underwriting and pricing are closely connected, although the process varies by insurance company and type of insurance.

The information an insurer gathers helps it understand the likelihood and potential severity of a claim. That information, along with the insurer’s approved rating methodology and applicable state insurance regulations, can influence the premium and coverage terms offered.

This is also why it’s important to compare more than the final price of an insurance policy. Differences in coverage limits, deductibles, exclusions, endorsements, and carrier underwriting can all affect what you’re actually getting for your premium.

How Can an Independent Insurance Agent Help With Underwriting?

Your insurance agent and the insurance company’s underwriter have different roles.

The underwriter evaluates risk on behalf of the insurance carrier. Your independent insurance agent helps you understand your coverage needs, gathers information needed for the application, communicates with the carrier, and helps identify insurance options that may fit your situation.

That relationship can become particularly valuable when your insurance needs aren’t completely straightforward.

Maybe you own an older home. Maybe your household has multiple vehicles and drivers. Maybe you operate a growing business with risks that have changed considerably since you first purchased your policy.

Rather than trying to determine on your own which insurance company’s underwriting guidelines may be the best fit, an independent agent can help you navigate the process.

Find Insurance Coverage That Fits Your Needs

Insurance underwriting can seem complicated from the outside, but its purpose is relatively simple: helping insurance companies understand the risks they’re agreeing to cover.

For consumers and business owners, the key is providing accurate information and working with an insurance professional who can help you understand your options.

At Jensen-Sundquist Insurance Agency, we help individuals, families, and businesses throughout Wisconsin and Minnesota navigate their insurance options. As an independent insurance agency, we can work with multiple insurance carriers to help identify coverage that fits your needs.

Have questions about your current coverage or looking for a new insurance policy? Contact Jensen-Sundquist Insurance Agency to talk with an experienced independent insurance agent.

Frequently Asked Questions About Insurance Underwriting

What does an insurance underwriter do?

An insurance underwriter evaluates risk on behalf of an insurance company. Underwriters review information about an applicant or the property, vehicle, business, or other risk being insured and determine whether it meets the carrier’s underwriting guidelines.

What information do insurance underwriters check?

The information depends on the type of insurance. An underwriter may review application information, insurance and claims history, property details, driving information, business operations, inspections, reports, and other information permitted and relevant to the coverage being requested.

Why would an insurance underwriter ask for pictures of my house?

Photos can help an insurance company verify information about a property and evaluate its condition or particular features. An insurer might request photographs of a roof, exterior, electrical system, outbuildings, or other areas as part of its underwriting process.

How long does insurance underwriting take?

There is no universal underwriting timeline. Some applications can be evaluated quickly using automated systems, while others require additional information or manual review. More complex risks may take longer.

Can an insurance company deny me coverage after underwriting?

An insurance company can decline an application if the risk doesn’t meet its underwriting guidelines. Because different insurance companies have different guidelines, an independent insurance agent may be able to explore coverage through another carrier.

What’s the difference between an insurance agent and an underwriter?

An insurance agent works with customers to understand their insurance needs and obtain coverage. An underwriter evaluates risk on behalf of the insurance company and determines whether an application meets the carrier’s guidelines.

Does underwriting happen every time I renew my insurance?

Insurance companies may review risks throughout the life of a policy, including at renewal. Changes to the property, claims, driving records, business operations, carrier guidelines, or other factors can potentially affect renewal decisions or coverage terms.