WHY DO COMPANIES USE UNDERWRITING RULES?
A. Insurance works according to a “pooling” concept. This means that companies “pool” the money they receive from you and the other drivers they insure. As a policyholder, you and the other drivers are part of the company’s risk pool. The cost of all the claims paid out by the insurance company is reflected in the rates it charges its drivers. Companies are careful not to insure too many drivers who have had a lot of claims in the past, because these drivers may continue to have high claims and may cause insurance rates to increase for all the other drivers in that pool. HIGH-RISK DRIVERS AND THE FACILITY ASSOCIATION High-risk drivers are those drivers who have had an unacceptable number of at-fault accidents, convictions, non-payment of premiums and other risk-related items. These drivers may find it difficult to buy car insurance because they are a higher risk for insurance companies. There are some companies that will insure high-risk drivers. These companies are known as “non-stand
