What is a No Known Loss Letter and why does it matter to you?

A no known loss letter, also known as a statement of no loss, serves as a legal agreement between the policyholder and the insurance carrier.
It confirms in writing, with a signature from the named insured, that there have been no losses, lawsuits, claims or any other circumstances that could lead to a claim under the aforementioned policy during the provided policy period.
It further confirms that if any such loss, lawsuit, claim or other circumstance did take place during the period, the submission of the signed letter could result in the cancellation of the aforementioned policy, as well as the potential for civil and/or criminal penalties.
In addition, the named insured understands that if the carrier responsible for issuing the aforementioned policy becomes obligated to provide compensation for any loss, lawsuit or claim that took place during the period, such compensation is not covered by the aforementioned policy.
The insurer reserves the right to seek complete reimbursement from the named insured for such compensation.
When signing a no know loss letter, the policyholder is promising the insurance carrier that they will not be attempting to make any claims for losses that occurred during any prior lapse in coverage.
Loss Run reports are an important tool, similar to a personal credit report.
The Loss runs provide underwriters with a clear picture of the claims history and show how losses have potentially contributed to increased carrier costs.
For this reason a Loss Run report is one of the most important documents used while negotiating insurance rates.
Aside from loss runs, a well put together no known loss letter will help underwriting understand the loss history and potential future loss costs of a company.
Please contact us with further questions on this or any other risk management topic. We will see you again soon!