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Thread: Loss Ratio Affected by Vandalism Claim?

  1. #1
    Senior Member
    Join Date
    Jan 2008
    Temecula, CA

    Default Loss Ratio Affected by Vandalism Claim?

    About a year and a half ago I had a vandalism claim on my Town Car, insurance shelled out about $3k, when I asked my insurance agent he said that this does indeed go against my losses, but I have had other agents and company owners tell me the exact opposite. My state is California if that matters, but I am wondering if my agent is trying to keep his loss ratios lower for a bonus or if comprehensive claims like that do in fact factor into my loss ratio. Any help greatly appreciated!

  2. #2
    Senior Member
    Join Date
    Jan 2006
    Lou., Ky & all other states


    This is a very good question Ryan, but it cannot be answered with a simple 'yes' or 'no' and before non-insurance professionals answer, I will address it.

    To begin with, lets get this out of the way: your broker is not paid a bonus for the performance of an account. Brokers are paid either a commission by the company or on a fee basis by the insured. However, it is in the best interests of a professional broker to write good business though, because writing a lot of poorly performing policies can and will result in the loss of the ability to write policies with a carrier that has had a bad experience with a broker. Notice I used the word professional, because there are brokers that will burn different companies for years until they find themselves without any viable markets.

    Now, to address your question about a Vandalism loss. Yes, a Vandalism loss, which would be paid under the Comprehensive or Specified Perils portion of an auto policy, should the insured purchase the coverage, will be shown on a loss run. The loss does in fact impact your loss ratio because it is a paid loss. After this point is where it becomes not as simple to address.

    Losses carry weight with them. In regards to commercial auto insurance, the worst/heaviest loss to have would be a Liability loss and there are two types. The first and heaviest is a Liability Bodiliy Injury loss, a loss in which your operation is liable for injuries to a third-party. Liability Property Damage losses would be second heaviest, a loss in which your operation is liable for the damage to property owned by a third-party.

    A Collision loss can carry more weight than that of a Comp/SP loss depending on the cause of the loss. If your operation is responsible for the loss (chauffeur hits a tree for example), it is going to weigh heavier than should the loss be a result of an Uninsured or Under Insured Motorist causing the loss.

    The best type of claim an operator could have, if they are going to have one would be a Comp/SP loss. These types of losses are generally unavoidable. Such as weather and animal related losses. Vandalism claims, while out of the control of the insured to an extent, can be avoided or at least the risk of such losses can be minimized by taking precaution in selecting the garaging location/conditions of the vehicle(s).

    This claim by itself should not impact your insurability, underwriters have discretion to waive a paid loss from the underwriting process within reason. However, insurance companies look for frequency and severity. Should an operator have multiple claims, or a very poor loss ratio, all claims will be weighted about the same, and therefore can have an impact not only on the pricing, but could also have a negative impact on the insurability of the operator.

    If this does not fully address your question, or if you have any questions or concerns that can be addressed please feel free to ask them in this thread as it may be beneficial to some or all of the members.
    Last edited by Limo Insurance King; August 9th, 2012 at 05:24 PM.

  3. #3
    Senior Member
    Join Date
    Jul 1999
    Los Angeles, CA


    Ever helpful, and ever on point... as usual, an excellent explanation, Phil!
    Karl Jones


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