Insurance companies know a lot about the people they insure. When they give you a quote, it’s based on a number of different factors.
But when insurers don’t have access to all the information (e.g. your driving record or claims history) or if the information is wrong, this can lead to higher rates.
A letter of experience is an easy way to address this.
What is a letter of experience?
A letter of experience is a document that you can ask for from an insurance company that has previously insured you. It shows what your record was with them as a policyholder. You can think of it as a reference letter.
When you’re shopping around for quotes, it’s an easy way for insurance companies to verify your information, such as your good driving record and/or claims free record.
Who should ask for the letter?
A letter of experience helps an insurance company confirm key details about your driving history, so helps out if you’re in the following situations:
- You’ve had insurance before, but you weren’t the primary insured person on the policy. For example, you were on a policy with a roommate or with your parents.
- An insurance company has requested one from you to update their information. For example, they incorrectly marked you down in their system as the “at fault” driver in an accident. A letter of experience would allow them to update their system with the correct info.
And, of course, people who are looking to switch insurance companies can always ask for one if they want to use an experience letter during the process of getting multiple quotes from insurers.
What information is in the letter?
A letter of experience will usually have the following information included:
- Details of what was insured, like a car or a house.
- The information of who is on the insurance policy. It’s usually the registered owner of the property or the car. But it can also include other people’s names if multiple drivers were insured on the car.
- The effective date and end date of the insurance
- The policy number
- The claims made against the policy, any claims paid during the time of insurance with details of the cause of the claim, and how much was paid.
- Information on why the policy ended. For example, if it was canceled for nonpayment or if you owe money for your insurance premiums.
How a letter of experience can help you
Insurance companies tend to view first time policyholders as a risk. Having a letter of experience and being able to present it is an easy way for you to prove that you’ve had prior experience getting insured.
There’s also a chance for you to get a discount, though it’s not always guaranteed. A good discount or even a discount itself completely depends on the car insurance company. For example, maybe your letter of experience shows that you’ve been accident-free for two years, but the insurer doesn’t give out a claims-free discount until you’ve had proof for three years.
Do all insurance companies require one?
Insurance companies do not require a letter of experience. But it never hurts to ask the company if a letter of claims experience or insurance history would help when they are setting the cost of your policy.
How to request a letter of experience
It’s a very easy process. You simply just have to ask your agent at your insurance company. Even if you haven’t been insured for awhile, you can still call the last insurer you were with and ask them to send you one.
Switching insurance companies
It can be useful to keep updated versions of your letter of experience as it will help you in the future if you find yourself shopping around for quotes or if you plan on switching insurance companies.
While a discount is never guaranteed, the letter of experience will prove what kind of policyholder you are and could result in savings on your premium at the next insurer.
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