Underwriting

Before an insurer agrees to cover your business, it needs to understand what it’s taking on. Underwriting is that review. An underwriter looks at the information you provide, judges how likely and how expensive claims might be, and decides whether to offer a policy and how to set it up.

What underwriters look at

• what your business does and how, often captured as a class codeClass codeA class code is a number insurers use to classify what your business does, so your rates reflect the typical risks of businesses doing similar work.Read the definition
• where you operate, and the condition and protection of any property
• revenue, payroll and number of employees
• how long you’ve been in business
• your claims history, usually from loss runsLoss runA loss run is a report from your insurer listing the claims filed under your policies over a set period, with dates, amounts paid and whether each is still open.Read the definition
• contracts you sign, and the limits they require

Some insurers also check outside information, such as property records or inspection reports.

What underwriting decides

• whether to offer coverage at all
• the premiumPremiumA premium is the amount you pay an insurance company for a policy, usually set for a 12-month policy period and paid upfront or in installments.Read the definition
• which limits, deductiblesDeductibleA deductible is the amount you pay toward a covered loss before your insurance pays, usually subtracted from the claim payment.Read the definition and endorsements are available
• any conditions or exclusions specific to your business, such as a requirement to keep certain safety equipment

Underwriting doesn’t stop once you buy. Insurers review again at renewal and when you change coverage, and some premiums are adjusted after a premium auditPremium auditA premium audit is the insurer’s review of your actual payroll, sales or other figures after a policy ends, used to replace estimates and set your final premium.Read the definition.

Why accuracy matters

Answer application questions fully and accurately. If information turns out to be wrong or missing, the insurer may change the premium or terms, and in some cases cancel the policy or deny a claim, depending on the policy and your state’s law. With Corgi, questions are answered by underwriters, not a broker, so you can ask how a detail affects your coverage before you buy.