Loss runs are reports from your insurance provider that detail the past claims you’ve filed under your business insurance policies. They are, essentially, the “permanent record” of every time you’ve had to use your insurance.
Loss runs provide the history of your business’ past insurance claims. Your insurance company generates these reports and includes details such as types of claims, when claims occurred and amounts paid out by your insurance carrier.
Similar to how your credit score can determine whether you’ll get a loan or a credit card, potential insurers use loss runs to determine whether your business is eligible for coverage and what your rates will be.
Loss runs are mainly used when getting insurance coverage with a new carrier. However, they can also be a valuable tool to help small business owners when considering purchasing another business. Owners also use them to monitor and improve their own operations and safety practices.
An insurance loss run report contains a detailed run-down of every claim you’ve made, or claim activity. Different companies include slightly different details in their loss runs, but in general, you can expect to find:
When you shop for new insurance, most companies request loss run reports from the last 2 to 5 years you’ve been in business. Insurers can only provide loss runs for the period they covered you (aka the policy term). So, if multiple companies covered you over the requested time, you’d need to ask for a loss run report from each of them individually.
Loss runs are primarily used when shopping for new insurance. By providing your history of claims (or lack thereof), you can prove that your business is a safe bet for insurers and potentially get lower premiums.
Loss runs are used when applying for nearly every type of business insurance, including:
Additionally, a business might make a loss run request to evaluate its own claims history. By exploring how you’ve been using your insurance policies, you can uncover problem areas in your business. This may allow you to alter and improve your safety practices or your operations in general.
The final reason you may need a loss run is when purchasing another business. Just as you would check the foundation of a house before you buy it, evaluating the loss runs of a business you plan to purchase will let you know its risk level so that you can avoid any surprises in the future.
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