Editor’s note: Insurance Questions answers questions about insurance coverage for equipment rental businesses. Email your insurance questions to email@example.com. Answers are provided by ARA Insurance, Kansas City, Mo. For more information, call
800-821-6580 or visit ARAinsure.com.
Q: What is a loss run or loss history report and why are loss runs important?
A. A loss history report is a record of facts. It is simply a report from an insurance company showing claims reported under a particular policy. The report should include policy numbers and effective dates for each period you have had insurance with a particular company.
When claims occur, the loss history report should include the claim number, dollar amount, date and type of loss for each claim.
Claim history is an important part of the underwriting process. Insurance companies want to charge an appropriate rate for the actual risk of future loss. Statistically it has been documented over time that businesses that have losses tend to have more losses. Therefore, knowing the previous loss history of the applicant helps the company in determining the level of risk presented and the appropriate amount of premium to charge for that risk.
While all companies do not have the same underwriting guidelines, most companies today consider your loss history in determining whether to offer you insurance or not. Knowing the type and frequency of losses you have had is a part of their risk assessment of your business.