# Underwriting

> Underwriting defined: how car insurers decide whether to accept you, which risk group you fall into and what rate to charge, plus what you can check.

Canonical page: https://statecover-guide.com/glossary/underwriting/  
Last reviewed: October 28, 2026 by the StateCover Guide editorial team  
General information, not legal or insurance advice.

## Quick answer

Underwriting is the process an insurance company uses to examine the risk you represent, decide whether to accept it and, if so, set the rate. The person who examines and classifies the risk is called the underwriter.

## How it works

The NAIC describes underwriting as examining a risk, deciding whether to accept it, classifying the risks that are accepted and setting the appropriate rate. For car insurance, the Texas Department of Insurance says companies use underwriting to decide whether to sell you a policy and how much to charge, looking at:

- your driving record and claims history,
- where you keep your car,
- the kind of car and how you use it,
- at some companies, your credit.

Most companies check your claims history through a CLUE report. Texas notes that a company can charge more, or refuse to sell you a policy, based on that report. You can get a free copy each year from LexisNexis to check it for errors.

## Risk groups

Underwriting sorts applicants into groups. The NAIC glossary describes a standard risk as a normal risk insurable at standard rates, and a preferred risk as one less likely to have a loss than the standard applicant. Drivers whom no company will accept can usually get basic coverage through their state's assigned risk plan.

## Related terms

- [Rating factors](https://statecover-guide.com/glossary/rating-factors/)
- [CLUE report](https://statecover-guide.com/glossary/clue-report/)
- [Assigned risk plan](https://statecover-guide.com/glossary/assigned-risk-plan/)
- [High-risk driver](https://statecover-guide.com/glossary/high-risk-driver/)
- Guide: [Claims history and CLUE reports](https://statecover-guide.com/costs/claims-history/)

## Sources

- [NAIC, Glossary of insurance terms](https://content.naic.org/glossary-insurance-terms) — definitions of underwriting, underwriter, standard risk and preferred risk
- [Texas Department of Insurance, Auto insurance guide](https://www.tdi.texas.gov/pubs/consumer/cb020.html) — underwriting factors, CLUE reports and coverage for drivers turned down by insurers