Every insurance contract, or policy, involves at least two parties: the insurer and the insured. The insurer is the party, usually a company, that develops insurance policies, sets rates, and underwrites the coverage. The insured is the person who’s covered by and receives the benefits of the policy. If the insured suffers a covered loss, then the insurer pays the claim.
The insurer’s role in underwriting
An home insurer’s first job is to assess the risk that comes with insuring properties. Part of this involves evaluating tons of properties based on their age, value, condition, location, and other factors. An insurer analyzes this and historical data to see what kind of risks different homes face.
The insurer’s second major role in underwriting is to assess the risk of providing coverage to you, personally. This may include reviewing your home's features, doing a soft credit check, and reviewing your personal claims history. An insurer also finalizes the cost of coverage based on the coverage, limits, and deductibles you choose.
The insurer’s role in getting quotes
One of the first interactions you may have with an insurer when buying a homeowners insurance policy is getting a quote. This process usually begins with an application so the insurer can obtain basic information about you and your home. Your answers help the insurer determine your overall risk and set an appropriate premium.
Quotes are generally quick to obtain – so much so that insurers don’t even do estimates anymore – but may change slightly when the policy gets closer to being issued. The difference happens when the insurer’s underwriting department digs into the risks of your house to make sure it knows as much as it can about your property and its occupants. Changes to your quote should be brought to your attention and thoroughly explained.
You can obtain a quote in a matter of minutes, but binding and issuing a policy (i.e., confirming coverage and sending you a copy) can take a few days to complete. You should also note that many quotes come with expiration dates. If you don’t move forward with your insurer by that date, then you may have to apply for coverage again.
The insurer’s role in managing your policy
When you buy insurance, your insurer sends you a copy of your policy and declaration page as well as bill statements showing how much premium you owe. Your insurer is also responsible for providing you with the mechanisms to manage your policy.
Usually, this means that it has representatives to take payments, update your information, and make changes to coverage, but online options for these policy management tasks are becoming more common. Many homeowners complete these tasks through their insurance company's website.
Your insurer is required to send you a renewal notice prior to your policy’s term coming to date. This gives you a chance to decide if you need to change your coverage or if you want to accept a premium increase if there is one. For example, if you made renovations to your home or got married during your policy term, you may actually need higher limits.
The insurer’s role in claims
One of the most important things that your insurer does is administer the claims process. Most insurers have specialized departments that handle claims exclusively. When a claim arises, your insurer’s claims department takes your initial information, such as:
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Your policy number.
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A brief description of the event.
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Documentation of the damage, including videos or photos.
The claims department opens and assigns an adjuster to your claim who works with you to determine the cause of your damage and whether it’s covered by your policy. This may mean the adjuster has to visit your property. They often ask additional questions to determine the cause and total value of your loss, but they can also sometimes help you find contractors to make repairs.
Insurer vs. insured: What's the difference?
The main difference between the insurer and insured is their roles in an insurance contract. Insurers offer the policies that insureds buy. Both parties have to adhere to the contract terms and conditions. For instance, the insured has to pay premiums and maintain certain behaviors that lower risk, while the insurer must process and pay claims if a covered peril causes damage. Insurance policies are subject to renewal and an insurer can cancel or choose to not renew a policy if an insured doesn’t pay premium, doesn’t maintain the home properly, or has too many claims.
