Letter of ExperienceLetter of Experience

When it comes to the insurance industry, information is crucial. The more information insurance companies have, the simpler it is to create a policy. When you have been with an insurer for a long time, it is easy for them to know you. But what about when you want to switch insurance to another provider?

In this case, you might want a letter of experience. This document can come in handy to help you get better rates and insurance coverage.

How does it work? Read on to find out.

What is a Letter of Experience?
If you have ever asked for a letter of recommendation, you are familiar with this concept. A letter of experience for an insurer is a rundown of your history with an insurance company. You can get a letter of experience for all types of insurance, including:

Any time you get an insurance policy, you are building up a letter of experience. This document includes a bunch of information, such as:

  • Asset Details. For example, an auto insurance letter shows the make, model, and year of your vehicle.
     
  • Primary Insured. Anyone else who was on the policy is also included. For example, you may be the primary homeowner, but your spouse is also listed.
     
  • Insurance Dates. The letter includes the effective and end date of your policy.
     
  • Claims History. If you filed any claims while holding the policy, they are listed here. The more claims paid, the higher your rates, even with a new insurer.
     
  • Policy Termination. A letter of experience says why your policy ended. For example, if your policy lapsed or you missed payments.

Auto and motorcycle letters of experience also include your driving history. Moving and parking violations can also show up on your driving record, so keep that in mind -- the more violations on your record, the higher your rates.

How to Get a Letter of Experience from an Insurance Company?
Most people do not have to get a letter of experience when switching insurance. Providers will access your information through the Comprehensive Loss Underwriting Exchange (CLUE). They do this automatically once you apply, so a letter is often unnecessary.

That said, you may need to request a letter of experience for several reasons:

  • Secondary Insured. For example, if you have always been on someone else's insurance policy (i.e., your parents or spouse). Since you were never the policyholder, you will not show up on a CLUE report.
     
  • Gaps in Coverage. For example, if you have not had a policy in years (i.e., you have not owned a car). CLUE reports only cover the past five years.
     
  • Claims Dispute. Insurance claims show up on a CLUE report, but some details may be missing. A letter of experience can provide additional context related to the claim.

To get a letter of experience, ask your old insurance provider. If you are unsure if you need one, your new insurer will ask for a letter if necessary. If they do not ask, you do not need one.

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Benefits of a Letter of Experience
Having a letter of experience can yield some distinct advantages, like:

  • Insurance Discounts. You can save money by showing a strong and reliable insurance history. For example, many auto insurance companies offer a claims-free discount. You can save if you have not filed a claim within the last five years.
     
  • Faster Approval. Insurance underwriters hate the unknown. A letter of experience shows that you were previously insured. This insurance history helps your new provider get a sense of who you are.
     
  • Accurate Information. Your CLUE report may not have all the facts about a past claim. A letter of experience has more details so that you can avoid high insurance premiums.

Get Your Insurance Quote
Whether you need a letter of experience or not, buying insurance should not be a hassle. We can help you get the right coverage for your home or auto (or both). Click now to get started!

Hope that helps!

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Young Alfred