You may have been told you can file a claim for any losses you experience to your insurer if it is covered under your policy. While that may be true, all claims may not work out to your benefit – even if your insurance company covers them. In fact, some claims could actually hurt you more than they help you. Our goal is to help you determine when you should file a claim, and when not to.
When to File a Claim
We always recommend contacting your insurance agent if you are responsible for any incident resulting in another person’s injuries or damage to their property. Staying silent on these types of situations can put you in jeopardy of being sued and not having the coverage to protect your financial liability. Insurers often require you to report accidents in a timely manner. If you are sued after that time has expired, you could be on the hook for the costs.
We also recommend filing a claim for major losses that are far and above the amount of your deductible. A collision that results in the total loss of your car or a fire that destroys your home are both examples of claims you would not hesitate to make. In these scenarios, you come out ahead even after paying your deductible and higher premiums.
Rate Hikes Are Possible
Filing a claim does not always raise insurance rates, but it definitely can. This occurs once your policy renews and your insurer has reassessed your risk. If you were previously claims free, your actual rate might not change, but you might notice that your claims-free discount has been removed. If you already had a history of claims, additional claims could result in surcharges on your premiums. Unfortunately, once premiums are high, it may not be so simple to bring them back down. Avoiding future claims and maintaining a good credit score is one way, but you could still be facing higher rates for up to 3, 5, or even 7 years.
When Not to File a Claim
The decision to file, or not file a claim is one that should be made between you and your independent agent. Every person’s circumstances are different, and what works for one may not work for another. For example, a person with an active recent claims history could be at risk of losing their coverage if they file another claim in a short period of time. If a loss in this situation is a particularly small personal claim, the sensible choice might be to pay the claim out of pocket instead of filing and risking policy cancellation.
An independent agent can also evaluate the amount of your loss compared to your deductible. Even if you spent $3,000 on your wedding ring, your insurance might only cover $1,500 for fine jewelry that is not appraised and itemized on your coverage. Subtract a homeowners insurance deductible of $1,000, and you might only walk away with $500 to reimburse you for your loss. If you are at risk of your insurance premiums increasing as a result of the claim, this might be a situation when reconsidering the claim makes sense.
We always recommend contacting your independent agent with any questions you may have about claims. We work for you – not the insurance company. For more information about claims assistance or to request a free auto or homeowners quote, contact our office today. We look forward to serving you soon.