What is Underwriting?

• Insurance companies follow certain guidelines when reviewing properties to insure. Insurance agents refer to these guidelines as underwriting rules. Many homeowners are unaware of the role of the underwriter. This is mainly because owners work with an insurance agenct who submits their application to several insurance companies. The role of the underwriter is to calculate the risk of insuring a property and to determine premium and deductible amounts. The underwriter performs a delicate balancing act because high premiums will deter customers, while low premiums may leave an insurance company at risk in case of a claim filing.
  
  

Florida Underwriting Rules

• In Florida, underwriters review many factors when considering an application. One of these factors is the age and location of the home. Many insurance companies will not insure homes more than 25 years old or homes located in what the insurance company deems as a high-risk area. If a home is older, the insurance company may ask for records showing that certain items such as the roof, wiring and plumbing are updated to current standards. Applicants undergo a credit screening to determine their financial worthiness as well. Many Florida insurance companies will not write policies for homes not occupied by the owner, such as a rental home. Owners seeking to insure a rental home may qualify for dwelling property coverage. Some other underwriting factors are an applicant's claim history and if there are animals on the premises that the insurance company considers as dangerous.
  
  

State Insurance

• In light of the many insurance company departures from Florida, a state-run insurance pool was developed to provide insurance to those who are unable to obtain homeowners insurance. The name of the insurance is Citizens Property Insurance. It is important to note that underwriting rules still apply to the state-run insurance agency. The underwriting rules are available for viewing on the Citizens Property's website.
  
  

Considerations for Florida Residents

• Hurricanes, flooding and fires in recent years affect the underwriting rules set for Florida residents. Home buyers should consider these factors when deciding where they should buy. Homes in flood zones, tornado areas and near shore lines may be harder to insure. Checking with an agent prior to making an offer can assist the buyer with hi insurance options. Many homes in Florida were also built prior to the enforcement of hurricane building codes. Since the physical condition of the home is a factor in underwriting, these homes may carry a higher deductible or be harder to insure.