Insurance
What is Underwriting?
Underwriting is how insurers decide whether to offer you coverage and at what price. They evaluate risk factors like age, health, and driving record. Underwriters use statistical data and actuarial tables to assess risk factors. Under the Affordable Care Act, medical underwriting is prohibited for Marketplace plans, meaning insurers cannot deny coverage or charge higher premiums based on pre-existing health conditions.
In other forms of insurance, such as life, disability, auto, and homeowners, underwriting remains a standard practice. Applicants are evaluated based on age, health metrics, lifestyle habits, driving records, or property location to place them in corresponding risk classes.
At a Glance
PRACTICAL EXAMPLE
A 45-year-old smoker applies for a life insurance policy. The underwriter reviews their medical records and places them in a high-risk underwriting class, resulting in a monthly premium that is twice as expensive as a non-smoker's rate.
Official References
- What Is Liability Insurance En 1033 — Consumer Financial Protection Bureau
- Protect Your Home And Savings With Adequate Insurance — Consumer Financial Protection Bureau
Last reviewed: July 12, 2026
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