What is a Letter of Experience for Insurance & Why Do I Need One?

A letter of experience for insurance is a document that provides your insurance company with information about your car insurance or home insurance history in order to personalize your insurance quote. You want to get a letter of experience from your previous insurance companies so that, hopefully, you will get a better premium.

In this guide, we will explain everything you need to know about letters of experience for insurance. First, we’ll describe the purpose of such a document from the perspectives of both the insurance company and its clients. Then, we’ll tell you when and how you should get a letter of experience.

What is a letter of experience?

A letter of experience is basically a reference letter from your previous insurance provider. It is a document containing details on what was insured, such as a car or house, and which individuals are named on the insurance policy. In most cases, the name on the insurance policy is the owner of the property, but there are cases in which, in addition to the owner, multiple drivers are covered on a car insurance policy.

In addition, this reference letter includes information on any claims that were made while insurance was active, including how much was paid. The document also includes information on the grounds for policy cancellation, so that your prospective insurance provider will know if you owe money to the former provider and if the policy had been cancelled due to nonpayment.

Why do insurance companies want a letter of experience?

Insurance companies establish personalized quotes for their clients based on a variety of factors, with a client’s insurance history being an important variable. Because insurance companies don’t always have all the relevant data, providing them with a letter of experience should give them the required information they need regarding your insurance history.

As a first-time policyholder, an insurance company will see you as a higher-risk client when compared to more established clients in similar circumstances. While insurance companies do not demand a letter of experience from new clients, they’d see it as an asset allowing them to better evaluate you as a client.

Why do you need one?

As mentioned, you can get a new car insurance policy without providing a letter of experience. However, having one available could be advantageous, as the document will offer the insurance company with more information about you as a client. This will enable the insurance company to provide a better quote, and could qualify you for discounts.

Having a reference from your past insurer is useful when you move to another province, as you might need to change insurance companies. Similarly, getting a letter of experience from your former insurance provider would be helpful before moving to Canada from another country.

While switching insurance providers is the most common scenario in which you would want a letter of experience, other situations are worth mentioning. Examples include having a lapse in insurance, dealing with contradictory information in your insurance application, and not being the primary driver on your previous insurance.

If you have been a client of multiple car insurance providers, you will want to get a letter of experience from each of them.

How do you get a letter of experience?

Getting a reference letter is a fairly straightforward process, especially if you don’t have to get one from multiple insurance companies. All you need to do is contact your former insurance provider and request a letter of experience. Note that you cannot get one from your insurance broker, although brokers could help you get one from companies that used to provide you with insurance.

The easiest way to ensure that you have letters of insurance when you need them is to ask for one each time you switch companies. This way you won’t have to contact them again.

Bottom line: a letter of experience can help you save money

A letter of experience can help you get the best quote for new insurance policies. This document helps insurance companies confirm specific details about your insurance history to estimate your risk.

While insurance companies do not request that their clients provide letters of experience, it’s a good idea to ask them if providing one could help you get a better quote. If you are requesting quotes from multiple insurers, it’s best to ask each of them if they want letters of experience, as it could make a difference in the final value of your quotes.