Loss Control
What Does Loss Control Mean?
Loss control is a risk management technique designed to reduce both the likelihood and severity of potential losses, thereby minimizing the number of claims made against an insurance policy. It involves identifying potential sources of risk and implementing voluntary or agreed-upon actions that the policyholder should take to mitigate those risks.
Insuranceopedia Explains Loss Control
Both the policyholder and the insurance company benefit from loss control measures. By reducing the likelihood of claims, the insurance company is less likely to dip into its profits, while the policyholder may qualify for lower premiums.
A common example of a mutually beneficial loss control initiative is the installation of a sprinkler system in a commercial building. This reduces the risk of fire and its spread, leading to lower fire insurance premiums for the policyholder.
