Underwriting is the insurer’s review of your details and the risk to decide whether it can offer cover and on what terms.
Underwriting is the process an insurer uses to assess the risk it is being asked to cover. The insurer considers how likely a claim may be, how much it could cost and whether any policy conditions are needed.
The result can affect whether the insurer offers cover, the price, the cover limits and any exclusions. Lloyd’s explains that underwriting involves reviewing the likelihood and financial effect of a risk.
An underwriter may be a person who reviews an application. Some decisions can also be made through an insurer’s online systems. More complex circumstances may need a manual review or extra information.
The insurer uses the details provided during an insurance quote or renewal.
For car insurance, this could include:
For home insurance, an insurer may consider the property’s location, construction, occupancy and claims history. Flood risk, subsidence, building work or long periods when the property is empty may also be relevant.
For landlord insurance, the insurer may ask how the property is let, who the tenants are and what cover the landlord needs.
Each insurer can set its own underwriting rules and decide which risks it is willing to cover. This means two insurers may offer different prices or terms for the same details. The Financial Ombudsman Service explains how insurers may use different risk factors when setting prices.
You should answer every application question carefully and honestly. Under the Consumer Insurance (Disclosure and Representations) Act 2012, consumers must take reasonable care not to misrepresent information when buying or renewing insurance.
If you are unsure about an answer, check the facts or ask us before completing the application. You should also review your policy documents to make sure the recorded information is correct.
Wrong or incomplete details do not automatically give an insurer a remedy. The insurer must show that reasonable care was not taken and that the correct answer would have changed its decision.
Depending on the circumstances, Schedule 1 of the Consumer Insurance (Disclosure and Representations) Act 2012 may allow the insurer to:
If a qualifying misrepresentation was deliberate or reckless, the insurer may be able to avoid the policy, refuse claims and keep the premium unless that would be unfair. If it was careless, the remedy should reflect what the insurer would have done with the correct information. Premiums must be returned if a policy is avoided because of a careless misrepresentation.
The exact outcome depends on the facts, the questions asked and the effect the information had on the insurer’s decision. The Financial Ombudsman Service explains the remedies for misrepresentation and non-disclosure.
You can also read our glossary guides to disclosure, misrepresentation and non-disclosure.
Before accepting a policy, check:
An insurer accepting a risk does not mean every future loss will be covered. Claims remain subject to the policy wording, limits, exclusions, excesses and the facts of the claim.
Insurance information must be presented in a way that is clear, fair and not misleading. These requirements are set out in the FCA’s insurance conduct rules.
We arrange insurance through a panel of insurers. We do not underwrite every policy ourselves.
We can collect the information an insurer needs and look for available options for car, van, convicted driver, home and landlord insurance. Complex circumstances may need extra questions or documents.
Whether cover is offered, and its price and terms, will depend on the insurer’s underwriting criteria and the full details provided. We cannot guarantee that an insurer will offer cover or that a particular price or level of cover will be available.
