What is Loss History?
Loss history refers to the record of insurance claims filed by an individual or business over a specific period. Insurance companies use loss history to evaluate the risk of insuring a policyholder. The more claims a policyholder has filed, especially for significant losses, the higher the perceived risk.
Loss history is crucial for determining premiums in the context of property and casualty insurance, such as homeowners or auto insurance. For instance, if a homeowner has filed multiple claims for water damage or theft, their premiums may increase, as the insurance company views them as a higher risk for future claims. Conversely, a clean loss history can lead to lower premiums, as the policyholder is considered less likely to file claims.
Insurance companies typically review loss history through databases such as the Comprehensive Loss Underwriting Exchange (CLUE), which tracks claims filed across different insurance companies. Having a detailed understanding of your loss history is essential when shopping for insurance or renewing policies, as it can significantly impact the cost and terms of coverage.