General Insurance Questions

What kinds of questions should I be expected to answer when I am applying for an insurance policy? Why do insurers ask all of these questions?

When you apply for an insurance policy, you will be asked a number of questions. For example, the agent might ask you your name, age, sex, address, etc. In addition, you will be asked a number of other questions which will be used to determine what type of risk you are.

For example, when an insurance company is deciding whether or not to offer automobile insurance to a potential policy owner, it will want to know about the person's previous driving record, whether there have any recent accidents or tickets, what type of car is to be insured.

All of this information will be used for two purposes.

1. Based upon the responses to these questions, the insurance company will decide whether the profile of the applicant is consistent with the type of risks the insurer is trying to attract. Some insurers specialize in offering insurance to only very safe drivers and therefore will only accept applications from people who fit the profile of a safe driver.
2. Once the insurer has decided that your risk profile is consistent with the types of risks it accepts, the answers to the questions will be used to determine which rate to charge you. For example, the insurance company will decide whether you should be offered insurance at the high risk driver rate or the low risk driver rate.

Collectively, this entire process is known as the underwriting process. The primary function of the underwriting department in an insurance company is to decide whether or not to offer insurance to a person who has completed an application.

If the answer is yes, then the underwriting department seeks to determine the "quality" of that risk so the proper premium can be charged. That is, high risk people should pay more than low risk people.

What do I give up by not using an agent to purchase insurance?

The disadvantage of not using an agent to purchase insurance is that the policyholder does not receive as much, or often any, personal service. An agent with whom there is direct contact can be vital when purchasing a product and absolutely necessary when filing a claim.

Looking for more information on insurance? Contact Lee County Insurance Services or get a no-obligation quote by filling out our short online form.