State Farm Auto Insurance Practice Test

Which report provides information on a prospect's previous auto claim history?

1. Motor Vehicle Record (MVR)

2. Previous Insurer Report (PIR)

3. Loss History Report (LHR)

4. Consumer Report (CR)

The correct answer is: Loss History Report (LHR)

The correct choice offers a specialized view into a prospect's prior auto claims, which is crucial in assessing risk and underwriting decisions. A Loss History Report (LHR) compiles all past insurance claims related to an individual’s vehicle, detailing the nature of the claims, dates, and amounts paid out. This information is pivotal for insurance agents and underwriters as it provides insight into the driving behavior and risk profile of the prospect. Understanding a prospect's history of claims helps insurers gauge potential future risk and determines appropriate premium rates. A solid claims history can indicate a lower risk for future claims, while a lengthy history of claims or severe incidents may suggest higher risk. This data-driven approach is critical in maintaining the profitability and sustainability of insurance offerings. In contrast, other reports serve different purposes; for example, a Motor Vehicle Record (MVR) focuses on traffic violations and driving behavior rather than past claims. A Previous Insurer Report (PIR) typically offers insights into cancellations or non-renewals by previous insurers, while a Consumer Report (CR) encompasses broader aspects of an individual's financial history, including credit scores and personal data, rather than specifically detailing auto claims.