Parameters used by the underwriter: The following are some of the main parameters used by underwriters to underwrite auto insurance risk:
Proposal form
A proposal form is an important document in insurance and it is the most important part of the Insurance contract. The proposal form is treated as an offer from the insured to buy the insurance policy that feeds your needs. The proposal form contains all the details related to the insured, insured vehicle and the driver, etc.
The proposal form may be a single sheet A4 size paper to a multiple page booklet containing a lot of information related to the material facts and the regulatory requirements and the contact information.
The motor proposal form contains various sections. Some of the major sections of the proposal form are as follows,
- Insured related section
The insured related information section usually contains the information pertaining to the insured, like his name, address, his business or occupation, telephone numbers, fax numbers, email, and other contact information. Other information will relate to bankruptcy or insolvency, whether any insurer has declined his proposal or any insurer has imposed any additional terms and conditions to the policy. The questions may also relate to any financial interest in the vehicle being insured.
- Vehicle-related section
The car you drive will directly impact your insurance rate. That is why the proper selection of your vehicle will make it possible for you to obtain cheap car insurance with no deposit. The vehicle-related information section will contain vehicle make, model, identification numbers, registration numbers, year of manufacture, the color of the vehicle, engine capacity, weight of the vehicle, seating capacity, usage of the vehicle, whether any alteration has been done to the vehicle from the manufacturer’s specification, and insured estimate of the value (IEV) or also known as insured declared value (IDV) of the vehicle. These are some of the major questions asked by the underwriter through the proposal form for evaluation purposes. The IEV or the IDV is the sum insured under the policy.
- Driver related section
Driver related information section contains the following information related to the drivers, his name, date of birth, occupation, date of the license, any physical or mental infirmity of the driver including defective sight and hearing, convictions during the last five years, past loss, and past claims experience (claims history) during the last five years. In most commercial vehicle insurance or fleet insurance, there is a turnover of drivers, hence it is difficult to get the right details of the driver. Hence in such situations, the fleet safety program of the organization will be useful.
- Coverage and benefits section
The coverage section will allow the insured to choose the type of covers and the benefits he would like to have. The period of coverage will allow the insured to provide the date of the inception and expiry of the coverage. Like whether he would like to go in for the third party only coverage or would like to take a package policy.
Apart from this, what additional benefit covers he will be willing to go in for like personal accident cover to the driver and the passengers, dealer repair options cover or extension of the geographical limit cover, etc.
- Miscellaneous section
This section may contain different requirements like payment area (in case payment is by credit card, the necessary details to be filled in). Acceptance area, which will allow the underwriter to put in his remarks as to the acceptance and other terms and conditions. Disclosure of material fact area, which will reiterate the importance of material fact and warn the consequences of not disclosing the material fact.
- Declaration section
The Declaration section will contain the declaration by the insured that the information provided by him is true and complete to the best of his knowledge and it will also contain information about the material fact and the instruction as to what is a material fact and what type of fact need to be disclosed. The final portion of the declaration will contain the signature of the insured, the name of the signatory, and the date on which it is signed.
Past claims and losses
The past claims and losses are a good indication of what can be expected in the future. Hence it has to be thoroughly evaluated by the underwriter. The underwriter uses this information for rating the risk. Some risks like the fleet risks are sometimes rated based solely on the past claims and losses data.
There is a small difference between the past claims and the past losses. Data related to the past claims can be obtained from the past insurer or insurers, whereas the data related to the past losses can only be provided by the insured.
There is a possibility that the claims can be lower than the deductible which has not been claimed by the insured from the insurance company. Such losses also will play an important role in rating the risk and providing the necessary terms and conditions.
Claims experience is usually taken separately for the third-party and own damage sections. This gives a true picture for rating. Usually, the underwriters ignore one off a large loss so that the insured is not penalized for such a loss whilst rating.
However, no matter your past claim and losses history, you can find affordable insurance that fits your insurance needs. Get car insurance with no money down just by comparing many quotes online. Getting the best policy may just depend on your effort.
