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Insurance Pricing:Understanding Underwriting Policies of a Typical Car Insurance Company

If you are a typical consumer, you may be wondering what is involved in determining the cost you pay for car insurance premiums. In this regard, you may be interested in coming to at least a basic understanding of the underwriting process that it is utilized by your car insurance company in this day and age.

Through this brief article, you will be provided with a general overview of what is involved in the underwriting process of your car insurance company. Of course, if you find that you desire any additional information regarding the underwriting process, you should contact your car insurance company or your insurance agent. Additionally, the insurance commissionerís office in your state will also be able to provide you with some basic information in regard to the underwriting process employed by a typical car insurance company.

What is Underwriting?

In simple, general terms, underwriting is the process by which an insurance company evaluates the risk involved in accepting a consumer as an insured and in issuing that consumer a policy of insurance. Through the underwriting process, a insurance company -- including a car insurance company -- evaluates a number of factors in relation to how much of a risk that car insurance company or other type of insurance company will assume by issuing an insurance policy to you.




What Does a Car Insurance Company Consider as Part of Its Underwriting Policy and Process?

Each car insurance company has adapted its own policy associated with the underwriting process. With that said and understood, there are some common factors that each and every car insurance company takes into consideration when it comes to developing an underwriting policy and underwriting process. These different factors include:

1. Demography -- basic information about you including sex and age -- the younger you are and if you are male Ö your insurance rates will be higher.

2. Driving record -- if you have a good driving record (with no accidents and citations) you will have a better chance of obtaining favorable insurance rates from a car insurance company in this day and age.

3. Where you live -- if you live in an urban area, your car insurance rates will be higher.

4. The value of your car -- the more expensive you car, the more you will spend on insurance premium costs.

5. How you use your car -- if you use your car for business purposes rather than personal purposes alone, your car insurance premium rates will rise.

6. Make, model and age of your car -- all of these factors will impact the amount of money you will have to pay to your car insurance company in the way of insurance premiums.

7. Single versus multiple car policy -- if you insure more autos through your car insurance company, you likely will be able to obtain a premium reduction for insuring multiple vehicles.





 

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