Auto Insurance Underwriting: Simply Explained (2024)
The auto insurance underwriting process determines the risk of insuring a driver. The auto policy underwriting waiting period can take 30 to 120 days depending on the state and your driving history. Before you choose an auto insurance policy, check the company's financial strength and compare rates online to determine your auto insurer. Enter your ZIP code below to compare auto insurance quotes for free.
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Ty Stewart
Licensed Insurance Agent
Ty Stewart is the founder and CEO of SimpleLifeInsure.com. He started researching and studying about insurance when he got his first policy for his own family. He has been featured as an insurance expert speaker at agent conventions and in top publications. As an independent licensed insurance agent, he has helped clients nationwide to secure affordable coverage while making the process simpl...
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UPDATED: Jul 9, 2024
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Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.
UPDATED: Jul 9, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident auto insurance decisions. Comparison shopping should be easy. We are not affiliated with any one auto insurance provider and cannot guarantee quotes from any single provider.
Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
On This Page
Here’s what you need to know…
- Car underwriters determine how much of a risk you are to the insurance company
- They are the “behind-the-scenes” person who actually calculates how much your insurance premium rates should be and if the company will even offer to insure you
- Basic policies are sometimes written by an automated underwriting program
Your auto insurance employs a person called an auto insurance underwriter. What is underwriting? What does an underwriter do? This employee plays a crucial role in the claims process.
Today, we’re explaining exactly what an auto insurance underwriter does and asking: how does auto insurance underwriting work? Insurance underwriters are critical to understanding auto insurance and how your rates are determined.
If you’re trying to save money on your auto insurance, you can get free quotes from multiple insurers using our free tool above. Just enter your ZIP code to start comparing auto insurance rates now.
What does an auto insurance underwriter do?
What is an auto insurance underwriter? Generally, an auto insurance underwriter calculates risk, but what do auto underwriters do?
What exactly do auto insurance underwriters look for? Some of the specific roles and functions of auto insurance underwriters include:
- Review information from the customer’s auto insurance application to determine the actual risk of insuring the customer
- Determine the type of policy coverage to offer the client, including what auto insurance does not cover and under which conditions
- Alter or restrict coverage using auto insurance endorsements (a special insurance policy provision that overrides other policy information)
- Negotiate with your insurance broker or agent to add or remove certain policy coverage add-on options
FindLaw notes that insurance underwriters heavily rely on computer programs and their algorithms to evaluate what the driver’s risk will be to the insurance company, which is what determines policy rates as high risk car insurance costs more.
An auto insurance underwriter is a trained professional. These professionals have years of experience assessing risk. They use this knowledge to determine whether or not to insure a driver.
What else do auto insurance underwriters look for, and what is the main function of an underwriter? Underwriters determine how much of a risk a person or group will be to the insurer. Insurance companies are in the business of making money, after all. This is part of how insurers calculate your car insurance rates.
Is it in the insurance company’s best interest to offer insurance to this person? How much should we charge this person for insurance based on the risk assessment? Auto insurance underwriters work to answer these questions every day.
The rates they determine are based on a wide variety of factors, so your rates may not be the same as your friend who lives outside of the city.
But you can get a general idea with this chart, which shows average rates across the country.
Average Annual U.S. Auto Insurance Rates by Coverage Type
| Years | Average Annual Liability Auto Insurance Rates | Average Annual Collision Auto Insurance Rates | Average Annual Comprehensive Auto Insurance Rates | Average Annual Full Coverage Auto Insurance Rates |
|---|---|---|---|---|
| 2015 | $538.73 | $322.61 | $148.04 | $1,009.38 |
| 2014 | $530.01 | $308.32 | $143.45 | $981.77 |
| 2013 | $517.88 | $295.27 | $137.77 | $950.92 |
| 2012 | $503.28 | $287.87 | $133.30 | $924.45 |
| 2011 | $492.03 | $284.60 | $131.80 | $908.43 |
Things like your driving record, credit history, gender, and even your ZIP code affect how much you will pay. Your underwriter’s insurance rate determination will also change by company, as insurers determine their prices independently. How does insurance underwriting work?
Read More:
- Why did my auto insurance rate change after I received a quote?
- Which countries have the highest auto insurance rates?
Underwriting insurance is the process of evaluating the risk of insuring a driver and a vehicle. Before you get an auto insurance policy from an insurance company, the company needs to complete the underwriting process.
During the underwriting process, the company will analyze your vehicle, your driving history, and other information. Based on this information, the insurance company will be able to calculate your auto insurance risk. Then, the insurance company charges you a premium based on your risk factor.
In many cases, the “insurance underwriter” is just a software program. On standard auto insurance policies, most underwriting can be performed automatically with underwriting software. For other policies, however, the underwriter might be human. (For more information, read our “Vehicle History and Its Effect on Auto Insurance Rates“).
After determining risk
The underwriter or senior underwriter sets a price and establishes the insurance premium. The driver pays the premium. In exchange, the insurance company takes on the risk of covering the driver.
All of this takes place behind the scenes at an auto insurance company. After receiving a Geico auto insurance estimate online, for example, you might proceed with buying your policy. Before the policy is finalized, however, an underwriter will verify the information you provided.
Read more: How does the auto insurance company determine my premium?
Insurance companies are for-profit organizations: the company is built to earn a profit. Underwriters help protect the bottom line of an auto insurance company by accepting the right insurance customers at the right price.
The main questions an auto insurance underwriter needs to answer are: what is the likelihood that this customer will make a claim that costs our auto insurance company money? How much should we charge this customer to ensure we make a profit while still offering competitive prices?
Underwriters play a similar role in home insurance and health insurance: they work behind the scenes to calculate the risk of each policyholder.
As a customer, you should do your own research. These top insurers in the country have good ratings, as you can see below.
Top 10 Auto Insurance Companies by Market Share
| COMPANIES | A.M. BEST RATING | DIRECT PREMIUMS WRITTEN | MARKET SHARE | LOSS RATIO |
|---|---|---|---|---|
| State Farm | A++ (Superior) | $41.9 billion | 17.01% | 63% |
| Geico | A++ (Superior) | $33.1 billion | 13.41% | 71% |
| Progressive | A+ (Superior) | $27.1 billion | 10.97% | 62% |
| Allstate | A+ (Superior) | $22.7 billion | 9.19% | 56% |
| USAA (Military Personnel & Family Members) | A++ (Superior) | $14.5 billion | 5.87% | 77% |
| Liberty Mutual | A (Excellent) | $11.8 billion | 4.77% | 62% |
| Farmers | A (Excellent) | $10.5 billion | 4.26% | 61% |
| Nationwide | A+ (Superior) | $6.7 billion | 2.73% | 58% |
| American Family | A (Excellent) | $4.7 billion | 1.90% | 69% |
| Travelers | A++ (Superior) | $4.7 billion | 1.90% | 60% |
Read more:
- What happens if I disagree with State Farm’s decision on my auto insurance claim?
- What happens if I disagree with Progressive’s decision on my auto insurance claim?
- What happens if I disagree with American Family’s decision on my auto insurance claim?
- How does the auto insurance claims process differ for uninsured/underinsured motorist coverage with Allstate?
- How does Liberty Mutual handle claims involving hit-and-run accidents?
A.M. Best Ratings show the financial strength of a company. If you see a loss ratio within the optimum range of 45 to 75 percent, that’s probably a good sign.
Also, if customer service is something you highly value, you might want to look at the J.D. Power rankings, as they measure customer satisfaction for major insurers.
What about automated underwriting?
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Some Auto Insurance Underwriting is Automated
If you have a standard auto insurance policy, then your underwriting process may have been automated. A computer program might verify your information against public records, for example, before offering you auto insurance coverage.
Most auto insurance providers rely on automated underwriting systems. These systems are similar to the online quote application forms you see on our website or on an auto insurance provider’s website.
If you have a more complicated auto insurance policy, then it’s possible an underwriter will get involved. A human underwriter might get involved in the following situations:
- You have multiple claims or incidents on your driving record
- You have never purchased auto insurance to insure a new driver
- There were issues processing your payment or verifying part of your record
If your policy gets flagged to be handled by an underwriter, it’s not a big deal. It just means it requires a little more effort than the computer can handle.
Navigating the Auto Insurance Underwriting Process
Understanding the intricacies of the auto insurance underwriting process is crucial for anyone looking to secure coverage. During the underwriting car insurance review stage, underwriters assess the risk associated with insuring a driver by examining various factors, including driving history, credit score, and even geographical location.
The car insurance underwriting process involves thorough evaluations, where car insurance underwriters use both manual assessments and automated systems to determine appropriate premiums.
These underwriters follow strict underwriting guidelines for car insurance to ensure fair and accurate risk calculations, ultimately helping to maintain the financial health of the insurance company.
In the realm of auto underwriting, the role of a car insurance underwriter professional is pivotal. They rely on established auto insurance underwriting guidelines to evaluate each application meticulously. The car insurance underwriting review not only sets the premium but also influences the decision to offer a policy.
As part of the underwriting car insurance process, factors like past claims, vehicle type, and usage patterns are scrutinized. Understanding car insurance underwriting can empower consumers to make informed decisions when shopping for policies, knowing that the auto insurance underwriting process is designed to balance risk and coverage fairly.
Simplifying the Auto Insurance Underwriting Process
The process of underwriting auto insurance involves a detailed evaluation of risk by professionals known as car insurance underwriters. These experts utilize specific underwriting criteria for car insurance to assess various factors such as driving history, vehicle type, and personal information.
For instance, the Geico underwriting review includes a comprehensive analysis of these elements to determine the appropriate premium for each policyholder. The Geico underwriting process ensures that all risk factors are meticulously considered to offer fair and accurate insurance rates.
A thorough auto insurance underwriting review is essential for maintaining the financial stability of insurance companies. The role of a car insurance underwriter is to balance the risks and rewards of insuring each driver.
Understanding the meaning of Geico’s underwriting review can help policyholders comprehend why certain premiums are set and how their personal details impact the final decision. Moreover, motor insurance underwriting involves similar principles, where the Geico underwriting review ensures that each policy meets the company’s standards and protects against potential losses.
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The Essentials of Auto Insurance Underwriting
Understanding the motor insurance underwriting process is essential for anyone seeking auto insurance. The Geico’s underwriting car insurance review process involves evaluating a variety of factors such as driving history, vehicle type, and personal information.
For instance, State Farm underwriter professionals assess risk to determine appropriate premiums, similar to how an auto insurance underwriter expert at Geico would.
Adhering to Liberty Mutual underwriting guidelines, these professionals ensure fair and accurate risk assessments. It’s important to note that Geico’s 15 days of underwriting allows a short period for a thorough evaluation, adhering to Geico’s minimum underwriting standards.
The industry increasingly relies on automated insurance underwriting systems to streamline the evaluation process. An automated underwriting system for insurers efficiently handles standard applications, ensuring decisions are based on our underwriting guidelines.
Major companies like Progressive implement Progressive insurance underwriting practices, while State Farm underwriters follow specific State Farm underwriting guidelines. These systems enhance the accuracy and speed of risk assessments, making it easier for consumers to secure appropriate coverage quickly and reliably.
What is the difference between an underwriter and an agent or broker?
There are multiple groups involved with the auto insurance purchasing process for both monthly auto insurance and annual insurance, including auto insurance specialists like underwriters, agents, and brokers. These three parties might interact with one another regularly, but they all perform separate roles.
Think of the underwriter as the person behind-the-scenes. The underwriter receives an application and has to determine whether or not to offer car insurance to that person – and at what price.
The insurance agent and insurance broker, meanwhile, is the frontline salesperson: these are the people selling car insurance coverage to customers.
Agents do not typically have decision-making authority. Agents can offer auto insurance to clients who meet specific criteria. However, the agent is not typically able to alter the insurance policy outside of the boundaries of this agreement.
If a customer meets the basic criteria outlined in the underwriting manual, for example, then the customer might qualify for an auto insurance policy immediately. However, the agent is not typically able to “bend the rules” and change your policy without first consulting the insurance underwriter.
Read more: What is the difference between an auto insurance agent and an auto insurance broker?
Conclusion on What Underwriters Do
Unless you’ve made a claim before, auto insurance can be a bit of a mystery. It’s easy to get confused about how everything fits together. The auto insurance underwriter, however, plays a crucial role in how auto insurance companies operate.
Plus, if you’re ever wondering which states offer affordable insurance rates, just check out our list of insurance specialists.
Enter your ZIP code below to get free auto insurance quotes from multiple insurers and save money on your auto insurance by comparing rates from multiple companies.
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Frequently Asked Questions
What does an auto insurance underwriter do?
An auto insurance underwriter calculates risk and plays a crucial role in the claims process. They assess a driver’s risk to determine whether or not to insure them.
What do auto insurance underwriters look for?
Auto insurance underwriters evaluate various factors such as driving record, credit history, gender, and location to determine the risk and set insurance rates.
How does insurance underwriting work?
Insurance underwriting involves evaluating the risk associated with insuring a driver and a vehicle. The insurance company analyzes the vehicle, driving history, and other information to calculate the risk factor and set the premium.
How long does auto insurance underwriting take?
The duration of the auto insurance underwriting process varies by state, ranging from 30 to 120 days.
What is an underwriting review for car insurance?
An underwriting review for car insurance is a process where the insurance company evaluates the risk of insuring a driver by examining factors such as driving history, credit score, and other personal information to determine the appropriate premium.
How long does underwriting take for car insurance?
The underwriting process for car insurance can take anywhere from a few days to several weeks, typically ranging from 30 to 120 days, depending on the complexity of the case and the insurer’s policies.
What is an underwriting review with Geico?
An underwriting review Geico involves evaluating a potential policyholder’s risk factors, such as driving record and personal details, to determine the appropriate premium and whether to offer coverage.
What is underwriting in car insurance?
Underwriting in car insurance is the process by which an insurance company assesses the risk associated with insuring a driver and vehicle, using various criteria to decide on coverage terms and premium rates.
How long does Geico’s underwriting take?
Geico underwriting typically takes up to 15 days, although this period can vary depending on the specific circumstances of the application.
What is underwriting review Geico?
An underwriting review Geico is an assessment conducted by Geico to evaluate the risk factors of a potential policyholder, determining the terms and pricing of the insurance policy.
Why does Geico need underwriting?
Geico needs underwriting to evaluate the risk of insuring a driver and to set appropriate premiums, ensuring that they maintain profitability while offering fair coverage.
How long does car insurance underwriting take?
Car insurance underwriting can take anywhere from a few days to several weeks, with the typical range being between 30 to 120 days, depending on the insurer and the complexity of the case.
What does underwriting mean in car insurance?
Underwriting in car insurance refers to the process of evaluating a driver’s risk profile to determine the terms of coverage and the premium that will be charged.
What is Geico’s underwriting department?
The Geico underwriting department is responsible for assessing the risk of potential policyholders, setting premium rates, and determining the terms of coverage based on risk evaluation.
How long does Geico take to approve insurance?
Geico typically takes up to 15 days to approve insurance, although the exact duration can vary based on the specifics of the application and risk factors.
What is underwriting in auto insurance?
Underwriting in auto insurance is the process of assessing the risk of insuring a driver and vehicle, using specific criteria to set coverage terms and premium rates.
Why does Geico take 15 days?
Geico takes 15 days to complete the underwriting process to thoroughly evaluate the risk factors and ensure an accurate and fair premium setting.
Why does underwriting take so long?
Underwriting can take a long time due to the detailed assessment required, including verifying personal information, driving history, and other risk factors, to ensure accurate risk evaluation and premium setting.
What does an insurance underwriter do?
An insurance underwriter evaluates the risk of insuring a potential policyholder, sets premium rates, and determines the terms of coverage based on an assessment of various risk factors.
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Ty Stewart
Licensed Insurance Agent
Ty Stewart is the founder and CEO of SimpleLifeInsure.com. He started researching and studying about insurance when he got his first policy for his own family. He has been featured as an insurance expert speaker at agent conventions and in top publications. As an independent licensed insurance agent, he has helped clients nationwide to secure affordable coverage while making the process simpl...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.