What Are Loss Runs?
So, you just got asked to provide a loss run report? You’ve come to the right place.
You might be asked to show a loss run report when you apply for insurance or need to renew an insurance policy. Risk is an inherent part of a small business, and insurance companies need to know how financially risky your business is before they can give you an accurate quote on how much your policy should cost. A loss run reports is an insurer’s way of measuring that risk.
In this post, we’ll cover exactly what a loss run report is, when you need one, and how to improve your loss run report, so you can move on with the process of insuring your business.
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What Is A Loss Run?
Loss runs are reports that show your company’s insurance claim history. In many ways, it’s like the credit score of the insurance world. Just a lender would look at a credit score to see what kind of lender you are approving your loan application, an insurance provider looks at your loss run report to help them know what kind of customer you’ll be.
The loss run shows how risky your business is for them by assessing the claims you’ve filed and the amount of money lost. If you are thinking of shopping around for insurance, you will want to provide a loss run report to insurance providers. Also, your current insurance provider might look at a loss run report to see if they need to raise your rates or offer you a different plan.
If you have had insurance coverage and haven’t had many claims, then a loss run report is your ticket to reduced insurance rates — it’s your golden ticket to say, “I’m a good business bet. I’m not too risky.” If this describes your business, you can take your loss run report and use it to negotiate a better insurance premium.
What Information Does A Loss Run Include?
A loss runs include the same data about your claim history. When you look at your loss run report it will contain the following information.
- Name of policy owner/the insured
- Policy number
- Date of each loss and claim
- Description of the claim
- Amounts paid to insured
- If the claim is still open or closed
Why Do I Need A Loss Run Report?
There are several reasons why you might need a loss run report.
1. You Want To Shop For A New Insurance Plan
The first and most common reason for a loss run is because you want to shop for insurance. Since a loss run report is your commercial insurance history, it demonstrates if you are a risky business or if you are a good investment, which is something potential insurance providers want to know. If you are shopping for insurance and have an insurance history, a loss run will often be required.
2. You Want To Lower Your Insurance Premiums
If you aren’t collecting data on business safety or shopping for new insurance, then you can use your loss run as a negotiating tool for lowering insurance premiums.
Think about your loss run report like your driving record. With car insurance, if you go so many years without any accidents, you are often rewarded with a discount. In a similar way, if you can show your current or potential insurance providers that your business has a track record of little or no claims, you’re proving that your business is safe and low-risk, which can often unlock better rates and premiums.
3. You Want To Assess Your Business’s Safety
You may personally want to see a loss run report if you are collecting independent data on various safety risks within departments. This can also show you which claims are still open.
If your business is risky and involves accidents and injuries, lawsuits and claims, a loss run is also a way to gather data about your business. Is there one department that is routinely injuring themselves more than another department? This kind of information can help you identify problem areas so you can implement better safety practices to reduce the chance of accident and injury claims.
What Types Of Business Insurance Require A Loss Run?
Loss run reports aren’t specific to one type of business insurance. Most insurance providers require a loss run report, regardless of which types of insurance they provide or what size of business they serve.
Where To Get A Loss Run Report
If you need to retrieve a loss run report, call your insurance account agent or agency and ask for them to send you a loss run report. You will need to tell them which business insurance accounts you’d like to receive loss run reports for, how many years of reporting you need, and the deadline for when you need the report.
Most states have laws that require an insurance company to respond to your request within 10 days. The speed of the report will depend largely on your insurance company.
How Insurance Companies Evaluate Loss Runs
As with all forms of insurance, the more claims you have, the higher your premiums may become. Every accident (at fault or not) that brings a claim to your insurance company’s attention will affect your rate and loss run report.
A company may look at your business and say it’s too risky. With a history of too many claims, lost lawsuits, and high-ticket payouts, your business doesn’t look too attractive to insurers.
Tips For Improving Your Claim History
A loss run is your claim history which means each time you need insurance to help cover a loss, the company makes a note of 1) What happened? 2) How much money it cost them.
Insurance companies are a business, too, and while our need for them may be imperative, they are not fundamentally altruistic in nature. If you become too expensive to insure, an insurance company may use a loss run to raise your rates or deny you additional coverage.
The best way to improve your claim history is to run a safe business that doesn’t encounter lawsuits. If your business is inherently risky, then maybe you should be paying those higher premiums. And while some businesses think potential claims might be out of their hands, that isn’t true.
There are many ways a business can make good safety choices to avoid claims. Train workers on how to properly use equipment and offer classes and incentives for staying knowledgable on the latest safety practices. Show proof of security system installation on your buildings, as well as proof of updating fixtures and following fire codes. Look for patterns in your loss run and determine what solutions could prevent those claims from happening in the future.
The biggest culprits for raising commercial premiums are worker injury and slip and fall lawsuits. While we may never be able to prevent all workplace injury, employing techniques to reduce worker injury and following proper safety protocols to protect people from falling will go a long way in protecting your loss run reports from pages of claims.
Loss runs are a tool. They help you and an insurance company determine what kind of coverage you might need.
Use this tool to your advantage: If you have a pristine claim history, use that as a bargaining chip and see if you can land yourself a competitive rate. If you don’t have a pristine claim history, can you determine areas of growth needed for your company? Ultimately, injuries and lawsuits are expensive and aren’t fun for anyone so finding ways to mitigate them or rewarding yourself for avoiding them is why a loss run will benefit you.