4 Things to Know About How Loss Control Affects Business

Loss control is a form of business insurance which is specifically designed to calculate and cover risk management practices. The idea behind this is to reduce the overall possibility of a claim being made on insurance policy. Loss control specifically pinpoints the possible sources of risks which come at running a business, providing services, and manufacturing products. The sources of these risks are then analyzed and scrutinized to create minimum danger.


Oftentimes, insurance companies will offer businesses incentives to provide or require their employees to go through extra training. This is to ensure that the insurance company does not need to pay on work-related damages or injuries due to negligence.

An example of this would be a company sending their drivers to extra safety seminars at the local driving school.

The incentive the insurance company offers the business in return is usually a lower premium. Some companies will also lower the cost of riders, or even of the levels of insurance offered because they feel the business offers safer practices.


Sometimes loss control areas of the policy will also require businesses to undergo health code and safety upgrades. If the business building is not up to fire code, insurance companies may insist that the business either expand or install mandatory sprinkler systems. If a business is found to have mold or asbestos, the insurance company will require the business to change locations or clean up their current location in order to keep their employees safe. Keeping buildings up to health and safety codes are absolutely paramount to ensuring the proper care of employees and of the products alike.

If a business is located in a strong storm area, the insurance company may require them to put in a storm shelter or storm windows. Having companies prepare for severe weather like flooding is also not uncommon.


Several insurance companies will also require businesses to invest in modern security systems, both cyber and physical. Preventing theft—and the temptation of theft—helps protect the insurance company’s investment in the business.

In a world full of cyber security attacks, ensuring that a business has up-to-date security protocols for their finances, plans, products and services reduces the chances of an insurance company having to pay claims on a loss.

Prepping for Consultations

Oftentimes, insurance companies will have appraisers go out to observe the business’s physical location as well as business practices to determine what kind of policy will be necessary to cover the business. During these consultations, the appraiser may ask for different documentation and information based on your type of business.

Asking about employee demographics, hiring processes, training process and floor operations are not uncommon. These consultants will often ask about building history, look over floor plans, and require a professional inspection of the space to be completed before writing up the policy.

Additionally—before the appraisal—the business owner should gather any and all materials they have on previous insurance policies as well as the company’s risk control policies and procedures. They should be prepared to discuss all safety features of any machinery. They should also be prepared to explain emergency protocols in depth to the consultant. The purpose of this is to ensure just exactly how much premium the business will need to pay the insurance company on a regular basis. Providing thorough information is necessary for understanding the best policy options for you. Additionally, the more thorough you are during the consultation, the better chances you have for receiving useful incentives.


Overall, loss control policies are put in place to protect both the business and the insurance company from having to suffer unnecessary loss.

Insurance companies encourage businesses to involve their employees and safe practices. They do this by providing lower premiums for companies that will put their employees through extra training courses to ensure their safety on the job. Additionally, insurance companies will often require companies to put in safety features to their physical location. Having strong cyber and physical security is important in determining how much loss control coverage will be needed. Lastly, business owners need to thoroughly prepare for their consultation with the insurance company’s appraiser. The more information the business owner can provide, the greater chances the business owner has for receiving incentives from the insurance company.

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