A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Oct 14, 2021

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Important facts to know...

  • When you sign up for auto insurance, you must meet the carrier’s underwriting requirements to be approved
  • One of the main underwriting requirements is that all added drivers must have a driver’s license for coverage
  • Insurance companies will run your motor vehicle record when you buy insurance or add a new driver to your plan
  • Driving experience is an important rating factor because experienced drivers tend to make better decisions
  • Being able to reference a driving abstract lets the company see if the driver has had reported tickets or accidents

When a consumer buys auto insurance on their vehicle, it’s easy to assume that the car insurance company is providing coverage strictly on the vehicle. While your auto insurance does follow the vehicle, it also protects the drivers listed on the policy.

Since a standard auto policy covers both a vehicle and a driver, the insurer will have specific requirements that applicants must meet before they’re extended an offer for insurance.

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One thing that you have to provide before an application will be accepted is your driver’s license. If you’re curious as to why a driving license is considered mandatory, here’s what you need to know:

What are underwriting requirements and why are they important?

All standard personal car insurance policies have to go through the underwriting phase.

When an application or a renewal is underwritten, the company’s underwriters are reviewing details and assessing the risk to see if the household qualifies or still qualifies for insurance.

Every company has its own set of underwriting guidelines and requirements. Some carriers won’t offer people with violations and accidents coverage and others are more lenient.

While there’s a huge range of leniency, some of the core requirements are standard because of how the contract is written. It’s basically an outline that underwriters and agents can follow when giving out quotes.

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What are the two main underwriting requirements?

Before you even consider shopping for insurance, the main underwriting requirements need to be clear.

  • First off, you always have to have an insurable interest in the vehicle you’re insuring. That means you must be the legal owner on your car’s registration.
  • The second requirement is that you or someone on the policy must have a license to drive the vehicle.

If you’re comparing rates and contacting agents when you don’t meet the basic requirements, you’re wasting your time. Don’t mistake quotes for temporary binders.

You could get through the entire quoting process and compare dozens of rate quotes just to find that you’ll be turned away when you answer the more detailed questions during the application phase.

Do you have a license when you apply for your insurance?

Getting a quote is simply part of the price comparison process. The quote isn’t binding and it can change at any time. Since the information isn’t verified, you could tell the agent pretty much anything that you want during the quote process and your answers won’t be questioned.

It’s not until you complete your application that you’ll be given a temporary binder of coverage while the application is being underwritten. The application calls for a lot more information.

You have to provide the following information:

  • your license number
  • the date you were licensed
  • your VIN
  • a lot of other small details like how many miles you drive

All of the information provided is verified and your final rate will be determined after underwriting reports are run. This phase can take anywhere from 30 to 60 days

. In the meantime, you’ll have a binder that affords you coverage during the underwriting phase as long as you didn’t lie about important details like your license, vehicle ownership, and your driving record.

Does it matter where you’re licensed to drive?

You don’t have to be licensed in the same state where you’re buying insurance but you do have to be licensed in the United States to meet insurance requirements

. If you have a license somewhere else, it could suffice temporarily. Most of the time, the carrier will only give you 30 days to get a domestic license before the policy will be set up for cancellation.

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Why do you need to provide the date you were licensed?

Not only do you need to give the agent your license number and the state where it was issued, you’ll probably also be asked for the date when you were issued a license in the US. The date you were licensed is important because you get credits for each year you’ve held your license.

Drivers who’ve only held a license for a few years will automatically hold a high-risk title even when they have a clean record.

As you accumulate years of experience, you can show that you’re a safe driver over an extended period of time. That’s why drivers with nine or more years of experience are labeled experienced operators. Experienced operators pay less.

Why do you need to provide past license numbers?

If you’ve been licensed in multiple states, you need to look up past license numbers. Underwriters will pull up your licensing information and abstract reports to see when you were first licensed in the state.

If you have more experience in the past, give your old license numbers and you’ll get those credits, too.

It Goes Beyond Being Able to Legally Drive

A major reason that you need to have a licensed driver in the home is because someone has to be able to legally operate the insured property. It’s possible to own the car and list another licensed driver if you’ve legally surrendered yours to the DMV.

If no one is licensed to legally drive, there’s no one to base the rates off of, but the licensing requirement goes beyond just this fact.

Insurance companies run everyone’s motor vehicle reports. These reports can show convictions for driving infractions and also accidents that have been reported to the DMV. It’s hard to hide accidents and tickets when you’ve been legally licensed to drive.

Being able to see these records helps insurers surcharge the right drivers and turn away risky ones.

As you can see, there are a number of reasons why you have to provide your license number to get auto insurance. Now that you know what you need to give insurers, start getting online insurance quotes to see which policy is best for you and your car insurance budget.

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