Loss History Frequently Asked Questions (FAQs)

Loss History FAQ

 

  1. What IS “loss history”?

Loss History, also called Loss Runs, Historical Claims Information, Claims History or Customer Claims Experience is to your insurance what your Motor Vehicle Record (DMV printout) is to your personal driving license.  The claims, or incidents in which your carrier paid out on your behalf, are listed, along with dates, and amounts paid and often limited information about the event.  This is normally an underwriting factor, which can affect insurance rates for at least three to five years from the date of incidents listed on the history, if any.

 

  1. I have never had a claim. Do you still need this document?

Yes.  Although we of course take every insured at face value, the carriers will need documented evidence for their file, in case of an audit performed on them.  Even if your loss history shows nothing to be reported, the carrier(s) will still require this document.

 

  1. If I’ve never had a claim, how can my company provide me a list of claims?

The carriers will simply list “none to be reported” or something similar indicating you are claims free for the time referenced.

 

  1. I know about all my claims; can I just write them down for you?

While this would be helpful for our file and to give more detail on losses sustained, which could help underwriting accept your policy for quote or apply additional discounts, this is not considered Loss History, as required by the carriers.  True loss history will have your name and business name if applicable, policy period(s) the coverage was in force, any and all claims during this time, with amounts paid or to be paid and will also have an issue date.  This date must be within 60 days of current policy expiration to be considered valid for quoting purposes. See sample loss history here.

 

  1. I have loss history from last year; can I just give you that?

Unfortunately, no.  The carriers require updated loss history for review as claims information and amounts change, and can be reported after the fact for up to five years or more in some states.  For this reason, carriers must review recently issued loss history and this is considered 30-60 days from current policy expiration, depending on carrier, program and account specifics.

 

  1. Why can’t the carrier just give me a quote before I got through the trouble of getting my loss runs?

The carriers use many factors when underwriting a policy, including things like vehicle type and use and driver record and experience.  A key factor in reviewing a business that has already been insured for any time is to review their previous claims experience, and determine what is known as loss ratio.  Loss ratio is a bit more complicated, and each carrier has their own formula for application to their rates, but in general it is the amount of premium you paid in, versus the amount of claims they paid out for your policy.  This factor is a large contributor to rates and acceptability and so they cannot issue anything more than a tentative figure without confirming this information.

 

  1. I don’t feel comfortable with others seeing my loss history; it feels private.

While we can understand this stance, and you don’t have to disclose this to customers or governing bodies in most states, it is a very important underwriting factor.  Attempting to hide or refusing to disclose will not help you secure a better rate and may in fact make it impossible to get any rate at all.

 

  1. I have a large or several losses on my record; do I have any chance of a quote or fair rate?

Yes, you still can qualify for programs, even without perfect loss history.  While several in a short time or very catastrophic incidents are of course going to give carriers reason to decline to quote, it is an understood fact that accidents happen, even to professional companies.  There are sometimes other determining factors about claims or claims history that can allow for carriers to quote and bind accounts with seemingly unprofitable loss ratio.  Providing accurate and detailed information is your best bet at a fair rate if you do find yourself less than ideal in terms of losses, as hiding information or claims is not only illegal, but puts the policy in jeopardy of being cancelled or voided if misinformation is later discovered.

 

  1. Where can I get my loss history?

You can request loss history from your current broker, or from the carrier(s) directly.  If you need help with this, contact our office with a list of your previous carriers and policy numbers and we can help you in requesting them.

 

  1. What if I don’t know my policy numbers or carrier names?

Without one or the other you will have a hard time.  You can usually find both by locating old policy documents such as the actual policy, insurance cards, certificates of insurance or permit filings.  You can also attempt to contact the broker at the time and request this information from them as they should have it on file for at least five years*.

*California insurance law; contact Dept. of Insurance in your state to find out more.

So You Want to Start a Limousine Business….

SO YOU WANT TO START A LIMOUSINE BUSINESS….

 

Info You Need to Know Before you Buy a Limousine

Not much can be as rewarding as being in charge of your own fate by owning your own business.  Not much can be as challenging or confusing either.  Every business owner will experience their own set of bumps along the road to success, and starting a limousine or public transportation business comes with its own set of forks and twists unique to the industry.  There are many blogs and articles on being successful once your business has started, and we’ve listed a few links below if you’re interested.  This post is focused on the pre-start up, how to start the process and resources to help you confirm this is the business plan for you.

1. Limos or Taxis …or Bus? Oh my! – Choosing your “Team”

Even the very first step of picking what type of transportation you will provide can be daunting for some, especially as industry changes add new transportation subtypes.  Limousines, Non-Emergency Medical services, shuttles, TNCs and taxis all fall under the official industry title of “For Hire Public Auto Transportation”. The difference between the main types of For Hire Public Auto Transportation might seem slight but they are key in not only how you market to and obtain clientele, but also can be very important for other business costs.  Depending on where you are located, there are a few main types of Public Auto Transportation, and each type has its own governing authority(ies), and permit and insurance requirements.

The first part of the step one is choosing your main transportation type, and sub division after that.  The main division in Public Auto (also called “livery“) work is pre-booked or on-demand.  Pre-booked services are normally limousine services, bus operations and some shuttle services.  On-Demand services tend to be taxis, Transportation Network Carrier (TNC) operators, and Non-Emergency Medical (NEMT) providers.  The latter two are generally dispatched from a home office or dispatch center, while taxi can be owner operated or part of a larger operation with shared dispatch.  Every state has different rules on requirements for each type of transportation, but here is a comprehensive list of how/where to apply for each state, which may help you narrow down your options.

2. R & D – Read and Do Your Homework

Once you have your preferred type of transportation service settled, you need to find a vehicle(s) to fit your business plan and clientele needs.  If you intend to do luxury or executive transportation, you should look for newer (the newer the better for these fleets), high end, sedans, SUVs or smaller stretched units.  High end vehicles such as Mercedes, Cadillac, Lincoln, Audi, Jaguar, etc. are traditional.  For an on demand or shuttle type service, minivans, passenger vans, and larger SUVs are often utilized.  For TNC and Taxis, sedans and minivans are common and for NEMT minivans, especially those with wheelchair lift equipment are the vehicle of choice. But the right type of vehicle is only part of the equation. Several things to consider when you research your potential purchase are cost of payments, cost of insurance and cost of permits.  While the cost of payments has a pretty obvious impact on your budget, many forget to include insurance and required permits in their initial budget or drastically underestimate the cost.  Permits vary in cost, but can be $250-2500 or more, when you include airport and parking permits in addition to state or local business licenses. Insurance can vary greatly, depending on required limits, what carriers you gain access to (via broker or direct) and what programs you can qualify for, based off your experience, vehicle and transportation type.  For example, in California annual For Hire Transportation rates can be anywhere from $3000-15000, per vehicle.  While the $15,000 price tag is not the norm, it’s definitely not uncommon especially for new ventures.  Knowing your potential costs before signing on the dotted line for a vehicle is crucial to proper budgeting and business plan development.

3. Dot the “I”s, Pay the Fees – Applying for Permits and Insurance

After you’ve planned out what and where you’ll provide your service, and which vehicle(s) will be in your fleet, it’s time to submit for permits and sign up for any state required programs.  The permitting process can often take several weeks, and most commercial insurance carriers are unable to write commercial policies until all required permits are at least “pending”.  This means timing is important, and you may need to work on both your permits and insurance quotes/policy at the same time in order to have the least delay in business start-up.  Finding the right broker can greatly reduce the stress and confusion with this process, as a qualified broker will have all the expertise and advice to keep you on the right path, and access to quality programs with lower rates.

Remember, you will not be able to legally operate your business without the proper permits/filings of insurance, so your start up budget must be sufficient to carry you through the initial set up costs and up to sixty (60) days after submitting applications.  You may be responsible for vehicle and/or insurance payments during this time, and chances are you will need to budget for some advertising or marketing of some kind.  Some sites and blogs have helpful tools like this LCT Magazine Limousine Cost Calculator created to help calculate the cost of livery vehicles.

Important Line Items to Budget For:

Vehicle(s):

  • Purchase Amount or Down/Monthly Amount
  • Maintenance Costs including detailing/cleaning of vehicle
  • Estimated Fuel Costs
  • Insurance Costs

Office Location:

  • Lease or Purchase Amount
  • Insurance Costs

Employees:

Permits:

  • Annual Cost
  • Required Maintenance/Documentation Costs

Advertising/Marketing:

  • Website Purchase/Setup
  • Social Media Marketing
  • Other Advertising such as print, local community events, donations, etc.

Educate and Inspire Yourself

Of course once you get your business officially rolling, there are many other factors to consider.   Long term goals are just as important as the start-up ones, so you’ll want to work on those sooner than later.  Here are a few articles we found, which were written to help transportation businesses thrive.

Seven Secrets of Highly Successful Limousine Businesses

Attention to Detail Sets CA Operator Apart

How Much Capital Do you Need?

What I Learned About Running a Business by Driving a Limo

 

Written by Stephanie Osorio, licensed commercial insurance agent with 12+ years experience working with and insuring For Hire Public Auto insureds.

Newsletter Vol. 1

Newsletter Vol 1 <-click here to read this article

Section Titles:

Expiration Expertise

To TNC or Not to TNC?

Inside Scoop

Insurance Terms Explained (vol. 1)

Talk Shop with JEG: Learn to ‘Speak’ Insurance

 While insurance terminology can be technical and specific, understanding phrases and terms used by carriers in your policy is vital for every insured.  Our Talk Shop Series is meant to help bridge the gap between insurance professionals, and professionals requiring insurance. 

 

Vol. 1

Insurance Term(s) – Additional Insured

Term Defined: In US insurance policies, an additional insured is a person or organization that enjoys the benefits of being insured under an insurance policy, in addition to whoever originally purchased the insurance policy.

Other ways you may see it: Additionally Insured, Additional Named Insured(s), AI, and Designated (Additional) Insured

How this applies to you as an insured: When you add an Additional Insured to your policy, you are extending coverage on the carrier’s behalf to the Additional Insured due to their involvement or potential liability by relation to yourself (business), in the event of covered loss. Due to this coverage extension, some carriers chose to charge a fee for each or after a certain number of Additional Insureds. Additional Insureds cannot make changes to your policy, but they will be advised if your policy goes into cancellation status.

If you do work with other limousine companies, in particular taking leads that they initially booked, you should request to be added on their policy as Additional Insured, and you may wish to add them to yours to fully protect all involved. Landlords will also wish to be named as Additional Insured on your policy and may even require additional coverages (which JEG can help you acquire if need be!).