Most states require everyone who has an automobile to be able to show financial responsibility or else the driver’s license may be revoked.  Financial responsibility is demonstrated by an adequate vehicle insurance policy.

Vehicle Insurance Application Process

The vehicle insurance applicant goes through two processes:  underwriting and rating.  The underwriting process refers to the insurance company’s assessments according to certain predetermined criteria.  The rating process refers to the assignment of the premium amount based on the results of the underwriting process.  An applicant is assessed based on typical characteristics lumped with people of the same risk assessment value and assigned the rates that correspond to his or her group’s premium ratings.

Underwriting and Rating Criteria

 During the underwriting and rating process, the insurance company bases its assessment mostly on the information contained on the vehicle insurance policy application.  Based on the information presented, the underwriters will assess the probability of the applicant’s filing or making a vehicle insurance claim.  This mathematical probability is the risk value assessment.  Generally, higher premiums will be charged to applicants with higher risk value ratings.

The factors that affect the results of the underwriting and rating process include demographics such as age, gender, marital status, occupation, employment history, income, etc.  From studies that have already been conducted just for the purpose of ascertaining group characteristics that relate to vehicle insurance claims, it has been proven that married policyholders are less likely to make a claim than unmarried ones.  Moreover, people who have stable jobs especially those who have been working for the same company for years are less likely to file a claim than more mobile policy holders.  Statistics also show that males tend to have a higher level of car accidents than females.

Traffic tickets and past violations, past vehicle accident histories, geographic location, and the vehicle make and model.  Every vehicle type has a corresponding risk assessment, and more sporty vehicles are perceived to be more risky than other vehicle models.  These are some of the other factors that are considered in the screening and rating process.  Past vehicle insurance coverage, driving histories, and prior vehicle insurance and other insurance claims are also given attention.

Vehicle insurance coverage is a comprehensive insurance plan so it usually provides protection for certain specific events and claims.  However, different states have different coverage requirements.  In particular, some states require that the policyholder have liability insurance or tort coverage, while some other states would require the no-fault liability insurance.