Q. What do I lose by not using an agent to purchase insurance?
A. The disadvantage of not using an agent to purchase insurance is that the policyholder does not receive as much, or often any, personal service. Direct communication with an agent can be vital when purchasing a product or filing a claim.
Posted in: General FAQ
Q. What kinds of questions should I expect when applying for an insurance policy? Why do insurers as
Q. What kinds of questions should I expect when applying for an insurance policy? Why do insurers ask all of these questions?
A. When you apply for an insurance policy, you will be asked your name, age, sex, and address, as well as other questions that will be used to determine what type of risk you are.
For example, an insurance company that is deciding whether or not to offer you automobile insurance will want to know your driving record, recent accidents or tickets, and what type of car is to be insured.
This information will be used for two purposes:
- Based upon your answers, the insurance company will decide if your profile is consistent with the risks the insurer is willing to accept. Some specialize in insurance for very safe drivers and therefore will only insure people who fit that profile; others are less stringent on their requirements.
- If the insurer has decides that your risk profile is acceptable, your answers to the questions will be used to determine which rate to charge you. For example, the insurance company will decide to offer you insurance at a high-risk driver rate or a low-risk driver rate.
Collectively, these steps are known as the underwriting process. The primary function of an insurance company’s underwriting department is to decide whether or not to offer insurance to an applicant. If the answer is yes, then the underwriting department seeks to determine the "quality" of that risk so that the proper premium can be charged. High-risk people will pay more than low-risk people.
Posted in: General FAQ