May 31, 2018 Practice Points

The Potentially Puzzling Question of Reporting Claims Likely with an SIR

Should you not report a claim to the company's insurer to protect your loss history?

by John Vishneski

Puzzle: A suit against the company is filed that does not look too serious. It is covered by the company's general liability insurance policy. However, in all likelihood, it will be resolved within the company's self-insured retention. Should you not report the claim to the company's insurer to protect your loss history?

Answer: Despite a popular view that not reporting claims protects against a premium increase or being dropped by your insurer, it is not a good idea to choose not to report a suit against your company to your insurer. Being subject to a premium increase or getting dropped usually happens at renewal time, when you are required to submit underwriting information to your insurer (or other insurers bidding for your business), and smart insurers ask in the application for loss history. Even smarter insurers (pretty much all of them) ask you to disclose types of suits or claims or occurrences that matter for their underwriting evaluation, without regard to whether you reported that claim. They want to know whether your company has been the target of certain types of liabilities and the frequency with which they occur.

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