There are a wide variety of terms in insurance that you will never, ever need to know in order to reasonably purchase and understand a renters insurance policy. One, however, that you should have at least a basic understanding of is insurance capacity.
Many risk management professional have been quoted as saying that, after a particular event, there is a lack of insurance capacity in the market. This is often applicable to commercial, but it’s also applicable to personal lines. Why does Disney own a captive insurer in Vermont? Because there was no capacity after 9/11. Companies just weren’t writing, because after a loss of that size, they didn’t know what their exposure was, or how much surplus they might have once all was said and done.
Capacity, according to IRMI, is the largest amount of insurance that a company or the market is able to write. It can also refer to how much more business a company or the market can write based on how much surplus capital is available. Why does this matter to you? Because it affects the price and availability of your renters insurance.
When you buy a Reading, PA Renters Insurance policy, for example, the insurer is looking not only at the risk that you present as an individual. They’re also looking at how much money they have available to pay total claims, what their future liabilities might be, and how much money they need to take in in order to keep claims reserves where at acceptable levels. This is also impacted by the markets where insurer funds are invested and their performance.
Of course, most of that is not calculated in real time every time a renters insurance policy is quoted. Insurance capacity is something undertaken by the company as a whole, and understood when underwriting standards and prices are set, products are defined, and rate filings are made.
Those things are all accounted for in the way your policy is priced. But understanding why insurance is priced the way it is is crucial to understanding if you’re getting a good price or if you should shop around. That’s why you need to know something about insurance and about personal risk management before you buy coverage. If you have questions, just call (800)892-4308 or click to get covered - whether you need Pennsylvania renters insurance quotes online or coverage anywhere else!
Effective Coverage offers the nation's only completely mobile platform to quote and purchase renters insurance right from your phone or tablet in just one minute. Get an online renters insurance quote today and protect your family.
What's Your Style?
- Do You Need Coverage ASAP? Check out the fastest way to buy renters insurance online and get covered in just 60 seconds!
- Do You Feel Like Talking About It? Just call Effective Coverage and a renters insurance expert can help you get great coverage in minutes.
- Do You Need Some Time Alone With Your Thoughts? We understand, which is why we created the Pennsylvania Guide To Renters Insurance.
- Just Want To Watch A Movie Together? See our video guide below.