Whether you’re looking to purchase a new insurance policy or renew an existing one, you will go through the underwriting process. This is how an insurance company decides if they are willing to offer you coverage and how much you’ll pay. Every carrier has different standards for underwriting, but understanding some of the common ones can help you prepare for an upcoming assessment. Here’s a quick guide to this process and how it will impact your coverage options and costs.

The Fundamentals of Underwriting 

What Is Underwriting?

When you apply for insurance, you’re asking the carrier to take on the risk of having to cover any losses you could incur under the policy they provide. Through the underwriting process, they will establish how risky you are to insure and then choose to accept your application, reject it, or modify it slightly. This can include requiring you to pay a higher deductible, setting different coverage limits, or amending certain sections.

What Is the Role of an Underwriter? 

Underwriters work behind the scenes for insurance companies and are responsible for analyzing all the information provided in your application to evaluate your level of risk. They are also the ones who decide what type of coverage you’re eligible for and what the terms of your policy will be. They are trained in risk assessment, which they not only use to decide if you’re insurable, but also to find ways to help you reduce the odds of facing future insurance claims. For example, if you have a pool, which increases your risk of filing an injury claim, they may recommend installing a gated fence around it to keep young children safe. 

What Is Considered When Underwriting a Policy?

There are several factors considered during the underwriting process that will affect your coverage and premiums. For homeowners insurance, an underwriter will review the location, age, construction, and condition of the property, including its safety and security features, electrical wiring, plumbing, and HVAC systems. They may also analyze your credit score and previous claims to paint a bigger picture of your history.

If you’re seeking high-quality insurance for your home, farm, or rental property, the professionals at Pella Mutual Insurance Company can help you secure exactly what you need. They offer a flexible underwriting process to ensure clients receive the best coverage at affordable rates. For over a century, residents in and around the Marion, WI, community have relied on them to protect their most valuable assets. Call (715) 754-5039 to request a local agent, or visit their website to learn more about their products.