What Does Loss Control Mean?
Loss control is a risk management technique that aims to lower the likelihood and severity of loss to reduce the amount of claims made against an insurance policy. It involves identifying possible sources or causes of risks as well as voluntary or agreed-upon actions that the policyholder should undertake to mitigate such risks.
Insuranceopedia Explains Loss Control
Both the policyholder and the insurance company benefit from loss control. By lowering the chance of having to pay out claims, the latter is less likely to need to draw from its profits, and the former can avail of reduced premiums.
A classic example of a mutually beneficial loss control initiative is the installation of a sprinkler system in a commercial building, which helps mitigate the risk of fire and its spread and results in reduced fire insurance premiums.