Once an agent has submitted an application, the underwriters are the people who review the application to ensure it is complete and that the risk meets the underwriting guidelines. The insurance department of each state requires that insurance guidelines, forms and rates are fair and not discriminatory. A company cannot say that it will not accept risks in certain parts of the city, for example. The insurance department will see that as discriminatory, especially if a large number of individuals from a particular demographic live there.

 The underwriter reviews the application, and calls the agent if any information is missing. Underwriting needs to know of any prior losses in past years (typically three to five years),  what was the nature of each loss, was the insured negligent in taking care of the property, did the insured have multiple vehicle accidents, are there attractive nuisances on premises and other things that could be problematic. Most states allow underwriting to reject a new application within sixty days of the effective date with ten or fifteen days' notice given to the applicant. The rejection can be for most any reason, although some states will vary. It is much easier for a carrier to reject a policy up front, than to nonrenew or cancel it later.

 Once the carrier has accepted the risk, the carrier must provide coverage until the risk has accumulated enough losses to meet the cancellation or nonrenewal criteria. The cancellation criteria are strict; there must be significant issues that would warrant a carrier dropping coverage midterm such as an inspection that shows the paint peeling off the entire house with yellow caution tape and a sign that says, "condemned". Even with a property in such poor condition, the carrier must give the insured forty-five or sixty days' cancellation notice, or the number of required days required by that state. If the insured rectifies all the issues to the satisfaction of the company, then the carrier may stay on the risk. For example, underwriters may advise the agent that if the insured fences in the pool or removes the trampoline that he will not cancel the policy; it depends on the seriousness of the issue at hand. 

Some things, however, such as property from a dump being loaded into the backyard and trees growing out of the gutters and into the siding will result in a policy just being cancelled, although the same notification period applies. If the insured's driver's license is suspended the policy may be cancelled. Cancellation occurs for the most serious issues, which are generally things that the carrier does not want to provide coverage for that were not discovered when the application was written. Pictures may not have been submitted with the application, and if upon inspection of the property after expiration of the underwriting period, an inspection shows that the property is in bad condition and neglected, the underwriter can cancel. This is why pictures are so often required for property policies. Underwriting knows that many insureds will not be honest about a situation or think there's nothing wrong with it. Many people have trampolines, but many do not know that even the American Academy of Pediatrics recommends trampolines be used only in professional sports training locations, and not even in regular gym classes.

Nonrenewals are different.  Again, the state required number of days' notice must be given, and it must be given before the renewal date. Nonrenewals occur when the policy has had enough losses to meet the filed criteria for nonrenewal, or there are other reasons the policy no longer meets the company's underwriting guidelines. Typically, nonrenewals occur because there is an accumulation of losses, or there are large losses that perhaps could have been prevented with proper care and attention by the insured. For a personal auto policy, carriers will assign points to moving violations and at fault accidents; for average speeding tickets it's generally one point, and three points for an at fault accident. The nonrenewal criteria may be ten points. Whatever combination of accidents or violations gets the insured to those ten points gives the carrier grounds for nonrenewal.

Property policy losses often have no fault since most losses are caused naturally, such as tornadoes, winds, fires, and other causes of loss. What carriers do then is determine that a certain number of losses within three years is the point of nonrenewal. Some states will require that certain natural losses not be counted against the insured. A carrier in general will be fine with one fire or wind loss; however if the insured has four such losses in a three year period, the policy may be nonrenewed due to loss frequency. Similarly, if an insured has had multiple losses due to candles left burning, that pretty obviously indicates that the insured is not taking proper precautions to ensure that the property is safe and does not burn.

 Underwriters cannot arbitrarily cancel or nonrenew a policy for any reason or because an insured who filed a claim is difficult to work with. Insureds have a duty to adhere to the duties after a loss, and not following those duties can result in denial of a claim, but generally not nonrenewal or cancellation. Underwriting must follow the state's guidelines for cancellation or nonrenewal.

 This does not mean that an insured who believes she has been cancelled or nonrenewed unfairly has no recourse. Every insured has the right to file a complaint with the state insurance department. When that happens, the department will send a notice to underwriting stating the insureds complaint, and asking underwriting to justify the cancellation or nonrenewal. Generally, the companies are given fifteen days to respond to the insurance department, but this varies by state. Underwriting will respond and the insurance department will review the complaint from the insured with the response from underwriting and then make a determination whether or not to overturn the cancellation or nonrenewal or let it stand. It will then advise both underwriting and the insured or claimant of its determination.