Before an insurance policy can be issued, the prospective insured can apply to the insurance company by:
An approximation received from Insurance company though any of the distribution channel viz. Direct/Agency/Ecommerce regarding the Premium for the requested coverage. It is also called Direct/Quick Quote.
Prospective Insured if agrees upon with the Direct/Quick Quote must apply to the insurance company through any of the available policy distribution channel viz. Direct/Agency/Ecommerce for Policy. The application contains underwriting information to help the company decide whether it should accept or reject the prospect's offer to become an insured. The application also contains Primary rating information that will help the insurance company decide how much the insured will be charged if the policy is issued.
After an agent has completed the application, he or she may have the authority to issue a binder for insurance. This is an oral or written statement made by the agent that the insured has immediate protection that is valid for a specified time.
When the application comes to the insurance company, underwriters review it for its acceptability. In addition to the application, underwriters may turn to other sources of information to help them evaluate the risk. These may include
- Inspection services viz. Carfax for Car History
- Government bureaus viz. DMV (Department of Motor Vehicle) for Motor Vehicle Report
- Financial information service organizations viz. Credit Bureaus for Credit Check
- Previous insurers viz. C.L.U.E Reports
- The company's own claim files
5.Rating:
When an insurance company agrees to issue a policy, a premium must be determined based on Rating Factors and Discounts and Surcharge.
Most insurance policies are issued with a definite effective date and expiration date. The policy period or term—the time between the effective date and the expiration date—can be six months, one year, or even three years. But at times, the insured or the insurance company might want to cancel the insurance before the policy expires.The insured can cancel the policy by writing a letter to the insurance company or by surrendering the policy to the company. The insurance company returns any unearned premium; that is, any premium not yet "used up" during the policy period.