What Is a Statement of No Loss & When Is It Needed?

A Statement of No Loss is a formal declaration from an individual or entity, affirming that no adverse events, claims, or losses have occurred during a specified timeframe. This statement is typically required before certain transactions or changes can proceed, providing necessary assurance to involved parties. It helps to maintain clarity and mitigate risks within various financial and insurance processes.

Defining a Statement of No Loss

It functions as proof that an individual or organization has not incurred any financial setbacks or incidents that could lead to a claim. This document is generally used to declare the absence of a claim or liability up to a specific date, often before a transaction or a change in policy status. Its primary purpose is to provide assurance to an insurer or financial institution that they are not assuming responsibility for undisclosed past events.

The fundamental concept behind requiring such a statement is to mitigate risk for the party receiving the declaration. For instance, an insurance provider needs confirmation that no damage occurred during a period when coverage was not active, preventing them from unknowingly covering a pre-existing loss. This declaration indicates a clean record. By signing, the policyholder confirms that they will not attempt to file claims for losses that happened before the policy was reinstated or renewed.

Situations Requiring a Statement of No Loss

A Statement of No Loss is commonly required in several specific scenarios. One frequent instance is the reinstatement of a lapsed or canceled insurance policy. If a policyholder’s coverage has ended due to non-payment or administrative issues, the insurer will typically request this statement to confirm no incidents occurred during the gap in coverage before reactivating the policy. This ensures the insurer does not assume liability for events that happened when the policy was inactive.

The statement is also necessary when an insurance policy is renewed after its original expiration date, or if there were delays in processing due to underwriting or payment issues. Furthermore, it may be requested when applying for new coverage, particularly if the application coincides with a “moratorium” period, such as immediately before a widespread natural disaster. In such cases, the insurer seeks confirmation that no prior damage exists that could trigger a claim once the new policy becomes effective.

Contents of a Statement of No Loss

A Statement of No Loss includes specific information. The document typically begins by identifying the policyholder or named insured, including their full name and contact details. It also specifies the relevant policy number and the name of the insurance carrier or financial institution involved.

A central component is a declaration from the policyholder affirming that no losses or circumstances that might lead to a claim have occurred. This declaration usually covers a defined period, such as the time between a policy’s cancellation date and its requested reinstatement date. The statement concludes with the signature of the policyholder and the date it was signed.

Process for Obtaining a Statement of No Loss

The process for obtaining a Statement of No Loss begins with a request from an insurance company or agent. The policyholder is responsible for completing and providing this document. Many insurers use a standardized form, such as the ACORD 37, for this purpose.

Once the form is completed, it must be signed and dated by the policyholder, often on the same day it is authorized by the insurer’s underwriting department. Electronic signatures are commonly accepted, though some companies may require additional verification for e-signed documents. The completed statement can usually be submitted via email, fax, through an online portal, or by mail directly to the insurance carrier. Policyholders should retain a copy of the submitted document for their records.