For which of the following scenarios would a loss run be particularly critical?

A loss run is a detailed report that provides an overview of an insurance policyholder’s claims history over a specified period. This document is particularly crucial when switching insurance providers because it allows the new insurer to assess the potential risk represented by the policyholder.

When changing insurance providers, the prior claims history can significantly influence the terms, pricing, and coverage availability of the new policy. Insurers review loss runs to identify patterns of claims frequency and severity, which helps them determine how to underwrite the risks. If a policyholder has a history of numerous or costly claims, it may lead to higher premiums or limitations on coverage from the new insurer, or even the possibility of being denied coverage altogether.

This scenario highlights the importance of transparency and accuracy in a policyholder's claims history since it directly impacts negotiations and decisions made by the new insurer.