Auto Insurance Terms Defined: Loss Exposure

Loss Exposure: any condition or situation that presents the possibility of a loss.

This is the information that any type of insurance company relies on to make decisions based on your current situation.  For instance, an auto insurance company will take all of the information you have entered in your application and apply all of your data to a set of defined standards.  By storing information like your location and your home address they can define the likelihood of you being involved in a loss.

After considering information like your age and the type of car you are driving as well the insurance company will determine your loss exposures.  Based on how many loss exposures you have your insurance premium will go up or down, meaning more or less money out of your pocket.