Glossary

Loss ratio

The loss ratio is the share of premium an insurer pays out in claims. A 60% loss ratio means $0.60 in claims for every $1.00 of premium collected.

By Andrew Bate, Co-founderReviewed by Stuart BateUpdated September 14, 2026

Why this matters for property managers

Managers with clean damage history and good documentation have low loss ratios, and a program lets them capture that instead of subsidizing worse operators inside a pooled per-night product. Loss ratio is also the number underwriters look at first at renewal.

Worked example

A 200-home manager collects $180,000 in guest fees over a year and pays out $72,000 in damage, a 40% loss ratio. At renewal the program lowers the retention and the manager keeps more of the fee. A manager running at 85% is asked to raise the fee or tighten screening before the next season.

Loss ratios in a damage program vs. a per-night product

In a pooled per-night product every manager pays the same rate, so a careful operator subsidizes a careless one and never sees the number. A damage program tracks your own loss ratio, the damage paid out divided by the guest fees collected, and prices the retention and the fee on it. Somewhere between 40% and 60% is healthy: the fee funds the damage with room for the program costs. What moves it is guest screening, house rules that are enforced, damage documented within a day of checkout, and a fee set for the homes you actually manage rather than a default. Ask for the loss runs at every renewal; they are the evidence that earns better terms.

Related terms

Premium

The premium is the price paid for insurance coverage, billed monthly, quarterly, or annually. In a guest damage program the guest's per-reservation fee plays the economic role of the premium for the damage layer.

Underwriting

Underwriting is the process an insurer uses to evaluate a risk and decide whether to offer coverage and at what price. Underwriters weigh portfolio size, locations, claims history, property types, and risk-management practices.

Self-insured retention (SIR)

A self-insured retention is the amount of loss a business agrees to handle itself before its insurer becomes involved. It resembles a deductible, but with a deductible the insurer manages the claim from the start; with an SIR the insured manages and pays claims until the retention is reached.

Browse every term in the insurance glossary for property managers.

Loss ratio: common questions

How do I lower my loss ratio?

Consistent guest screening, clear house rules, prompt documentation of damage, and a retention structure that keeps small claims out of the insured layer.

Does Velaris share program loss data with managers?

Yes. Program analytics show damage frequency and severity by property, which feeds both fee calibration and owner conversations.

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Program pricing

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