What is a statement of no loss?
A statement of no loss is required to reinstate your insurance policy if you miss a payment and your coverage lapses. This is required because some individuals will let a policy expire, and then try to get the policy reinstated to cover an accident. A statement of no loss proves to the insurance company that you did not experience an accident or loss during the lapse in coverage.
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Jeff Root
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Jeff is a well-known speaker and expert in life insurance and financial planning. He has spoken at top insurance conferences around the U.S., including the InsuranceNewsNet Super Conference, the 8% Nation Insurance Wealth Conference, and the Digital Life Insurance Agent Mastermind. He has been featured and quoted in Nerdwallet, Bloomberg, Forbes, U.S. News & Money, USA Today, and other leading...
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UPDATED: Jan 8, 2024
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Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance related. We update our site regularly, and all content is reviewed by life insurance experts.
UPDATED: Jan 8, 2024
It’s all about you. We want to help you make the right coverage choices.
Advertiser Disclosure: We strive to help you make confident insurance decisions. Comparison shopping should be easy. We are not affiliated with any one insurance provider and cannot guarantee quotes from any single provider. Our insurance industry partnerships don’t influence our content. Our opinions are our own. To compare quotes from many different companies please enter your ZIP code on this page to use the free quote tool. The more quotes you compare, the more chances to save.
Okay, so you’ve missed your insurance payment and you coverage has lapsed. Yeah, that’s right; insurance is a no-pay, no-play game. If you don’t make a timely payment within the “grace period,” your coverage stops.
If we’re talking about your car insurance, pull over. Don’t risk driving uninsured. The consequences can be dire. Try to imagine replacing your car, the person’s car you hit, and paying their medical bills out of your own pocket.
Not only will you have to call your auto insurance provider to attempt to get your coverage reinstated, you’ll also be signing some paperwork…specifically, a statement of no loss.
You may be wondering what the document is and why it is necessary.
Simply put, the statement of no loss is a document that attests to the fact that you did not have any losses (either liability or property damage) occur while your coverage lapsed.
It’s a letter that states you haven’t done any current losses or damages that could lead to claims. Your insurer will need this statement before they reinstate or issue your policy.
(Is it bad to let insurance coverage lapse?)
Not only that, but it also demonstrates that no “situation” occurred during the lapse in coverage that may lead to a liability or property damage claim.
The million-dollar question; why does the insurer care if I had a loss when there was no coverage in place?
Good question. The answer lies in what a reinstatement of your policy actually does for you and why the statement of no loss is necessary.
Why a statement of no loss?
It is easier and less expensive for both you and your insurer to reinstate an existing policy than it is to completely re-write a new policy. The re-write requires starting the whole policy process from scratch. This means a new quote, new signatures, a new down payment and more paperwork…all of which costs more money for you and your insurer.
Your insurer would prefer to simply collect the overdue payment, reinstate the policy and move on. If this occurs, you may not be subject to higher insurance premiums in the future (as a result of being a less attractive client to the insurance companies).
However, an insurance company would be NUTS to reinstate your policy without asking for proof you did not have a loss. You see, some unscrupulous individuals will let a policy expire…then try to get the policy reinstated because they had a loss and don’t want to suffer the financial consequences.
We know…gasp…right?
There are two situations when insurance companies may ask for a no loss statement. For example, if your policy lapsed or was cancelled but is being reinstated. Instead of requiring a new application, a new policy and new effective date, the insurance company may ask you to confirm that you haven’t experienced any losses during the lapse period. The second option is when you applied for coverage right before a widespread disaster happened. If the company went into a moratorium before issuing the policy, you will be asked to make a no loss statement once it’s lifted.
Insurance companies have seen it all. The insurance industry is too big of a target by criminals to NOT force us to sign a document that states this sort of thing didn’t happen.
You sign the document, then if an insurance claim is filed and it’s determined the loss happened during the period for which the statement was valid, you can forget receiving any money from the insurer.
A no loss statement reduces the risk of insurance fraud, because if these statements didn’t exist people would only buy insurance right after they experienced a loss.
You may actually end up in court for insurance fraud!
Insurance providers would not want to reinstate your policy if you were planning on asking them to pay for expenses during the lapse, so they usually require the statement of no known loss to protect themselves from potential claims.
Read more: Top 10 car insurance myths.
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Jeff Root
Licensed Insurance Agent
Jeff is a well-known speaker and expert in life insurance and financial planning. He has spoken at top insurance conferences around the U.S., including the InsuranceNewsNet Super Conference, the 8% Nation Insurance Wealth Conference, and the Digital Life Insurance Agent Mastermind. He has been featured and quoted in Nerdwallet, Bloomberg, Forbes, U.S. News & Money, USA Today, and other leading...
Licensed Insurance Agent
Editorial Guidelines: We are a free online resource for anyone interested in learning more about life insurance. Our goal is to be an objective, third-party resource for everything life insurance related. We update our site regularly, and all content is reviewed by life insurance experts.