Experience Letter for Insurance – What is it? (with Example)

If you’ve ever switched insurance providers or applied for a new policy, you may have been asked to provide an insurance experience letter. This document, often called a letter of experience, is an important document that helps insurance companies evaluate your risk as a policyholder. But what exactly does it include, and why is it important? Let’s explore what an insurance experience letter is, using an example to explain its importance.

Understanding the Insurance Experience Letter

An insurance experience letter is a formal document issued by an insurance company that summarizes your history as their client. It typically contains essential details such as the types of coverage you held, the duration of your policy, any claims made, and your payment history. It acts as evidence of your experience with the insurance provider and helps prospective insurers evaluate the risk you might bring to a new policy.

For instance, let’s consider the sample letter provided below; issued for Ms. Emely Klark by ABC Insurance Company. In the letter, the insurer verifies that Ms. Klark held health, vehicle, and property insurance from June 1, 2089, to September 30, 2094. The letter provides details about each type of coverage, including specific vehicles covered, claims made, and whether there were any lapses in the policy.

Why You Need an Insurance Experience Letter

Insurance companies use experience letters to determine if you are a “safe risk” to insure. If you have a solid history of timely payments, minimal claims, and a general track record of responsible behavior, you are more likely to be offered better premiums and terms. In the example provided, Ms. Klark demonstrated consistent premium payments, clear claims, and maintained coverage without any lapses—all factors that made her a low-risk candidate for future insurance policies.

If you are looking for new coverage and want to negotiate favorable terms, having an insurance experience letter on hand can be very useful. It allows you to prove your insurance history, which insurers take into account when determining the cost of a new policy. Without this document, some insurance providers may view you as a higher risk, especially if you have been uninsured for some time.

Key Information Included in an Insurance Experience Letter

The insurance experience letter provides key details that help insurers understand your past coverage and assess the risk you may pose as a policyholder. Below are the key components generally included in such a letter:

• Coverage Types and Details: The letter outlines the policies you held—whether health, vehicle, property, or others. In Ms. Klark’s case, she had complete coverage, including a 2090 Ford Explorer, health insurance for herself and dependents, and property insurance for her residence in New York.
• Claims History: An essential part of the experience letter is the claims history. It lists the claims filed, the nature of those claims, and how much was paid out. For Ms. Klark, the letter provided information on health claims settled for $5,000 and vehicle claims settled for $1,200 and $300, respectively. If no claims were made, this would also be explicitly mentioned, which can be a favorable sign for new insurers.
• Coverage Period and Lapses: Insurers want to know if there were any breaks in your coverage. In this case, Ms. Klark’s letter shows there were no lapses in coverage over the five-year period, which enhances her standing as a responsible policyholder.
• Risk Assessment: Finally, the insurance experience letter usually includes a summary of your overall standing with the company. For Ms. Klark, the letter highlighted her responsible conduct, clear claim process, and adherence to all policy requirements. This summary helps future insurers evaluate her as a low-risk policyholder.

How to Use an Insurance Experience Letter

If you need to switch insurers or are applying for new coverage, request an insurance experience letter from your current or previous insurance provider. This document will provide all the information new insurers need to assess your application. It could mean the difference between being offered an affordable premium or being considered too risky to insure.

Key Points