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How Does Auto Insurance Underwriting Work?

An insurance underwriter’s job is to go over all of your pertinent information and determine what level of risk you present to the insurance company. Without an underwriter, your insurance rates could possibly be much higher. When you apply for an auto insurance policy, an underwriter goes to work collecting important information. That information is then used to establish your level of potential risk. With that information, your agent can create a policy that is specifically tailored to meet your needs.

What Does an Auto Insurance Underwriter Do?


It is an auto insurance underwriter’s job to find out as much about you as they can. They look up your driving history, vehicle information, credit history, and many other important factors to determine whether you present a good risk. Once they have determined your level of risk, they will set your monthly premiums and put your policy into effect. It is the underwriter’s job to make sure your rates are fair and that the risk the insurance company takes to insure you is as minimal as possible.


Who Performs the Underwriter Calculations?


In the past, all of the calculations performed by the underwriter were completed by a real person. With the latest technology, that has changed. Now many of the calculations used in the underwriting process can be effectively performed by a software program that is designed to identify and analyze risk potential. The software program is much more detailed and provides a more accurate portrayal of the actual risk you present when you get behind your car’s wheel.


What Factors are Considered When Determining Risk?


An underwriter will take several factors into consideration when determining how much of a risk you are as a driver. One of the most important factors is your personal history. The underwriter will look at your driving record, personal background, criminal convictions, traffic citations, or even GPA if you are a student. The next factor is your vehicle. They will factor in its age, make, and model and whether or not it has been involved in any accidents in the past. Some insurance companies may also look at your credit score by visiting the three main credit bureaus.


Do Other Types of Insurance Have Underwriters?


Almost every type of insurance uses an underwriter to determine potential risk. Health insurance and home insurance use underwriters to help determine potential levels of risk. Each type of policy uses different factors, but the formulas are basically the same. Each one uses significant factors that are pertinent to the type of insurance being purchased. With the introduction of advanced technology, underwriter software programs can offer an accurate risk analysis for almost any type of insurance.


Understanding how an underwriter works and what processes they must go through to determine your individual risk level will give you insights into how your monthly premium is figured.


Avoid the search for finding the right auto insurance provider for your needs and visit Mayer Insurance in Apple Valley, Minnesota to secure your coverage today. We take the time to help you review your options, find a policy that meets your needs, and ensure you understand the contents of your coverage.

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