Loss run

Definition

The insurer's own record of every claim a business has filed.

Why It Matters

It is the one diligence document that prices something the buyer will pay for personally, every year, starting on day one. Underwriters quote the new owner off the same history, so a book of claims a seller has stopped thinking about becomes the buyer's premium. Three to five years is the usual ask, from the carrier or the broker of record and not from the seller's own summary, because a summary is a memory and a loss run is a ledger. Read it for pattern before total: one large claim is an event, and a steady drip of small ones is how the business runs. It also names what the seller never told you, since a claim is a written record of something going wrong.

In numbers: A 20% swing at renewal on a $40,000 premium is $8,000 a year, on the same business with the same revenue.