Drivers and homeowners are thankful they have insurance when the unexpected happens. After all, having the right coverage could spare you from tens or even hundreds of thousands of dollars in personal losses and shield you from financial liability in a lawsuit. Unfortunately, some claims could also result in years of higher premiums and even loss of your insurance coverage – all with little benefit for you in return. Continue reading to learn when to report a loss to your insurer, and when it might be better kept to yourself.
Claims Smaller than Your Deductible
Deductibles come in all sizes, from a few hundred dollars to thousands. This is the amount of money you agree to pay out of pocket for any claim you file for losses other than liability. It is usually a bad idea to submit a claim for personal damages that are estimated to be less than or only slightly more than the amount of your deductible. The insurer will not reimburse you for your loss if it is less, and to add insult to injury; it may be recorded on your claims history record.
Small Claims that Raise Your Rates
If a loss exceeds the cost of your deductible, it still might not be in your best interest to file a claim. Before you contact your insurer, find out what could happen to your rates and coverage after the claim. Will you lose your claims-free discount? Will you be disqualified from your preferred insurance policy? Will you face surcharges on your premiums? In many cases, it takes just one claim – big or small – to increase the price you pay for coverage by as much as 20 to 50 percent.
Keep in mind that your claims activity is reported to a consumer agency that tracks your claims history. This data is made available to insurers for up to 3, 5, and sometimes 7 years depending on the state and insurance company. Before you file a claim, ask yourself if the amount you will recover is enough to offset years of higher premiums.
Multiple Claims in a Short Period of Time
Your insurance company might not be too concerned if you have a couple of fender benders or home insurance claims over the course of a decade. If you have two claims in a single year, however, it could raise a red flag. Insurers tend to care less about the size of your claim and more about the type and number of claims you make. Multiple small claims could be frowned upon more than a single catastrophic claim since it could be an indication of future claims behavior. If you already have a recent history of claims, filing another one could lead to non-renewal of your policy.
Claims that May Not be Covered
Your neighbor’s insurance company paid for a full roof replacement after a big storm. Your roof has seen better days, so you contact your insurer to find out if your roof has enough damage to qualify for a replacement as well. Depending on the language in your policy, you may or may not have a legitimate claim. In many cases when it comes to roof claims, coverage is on an Actual Cash Value basis. This means that if you do have damage, you will only be reimbursed for the depreciated value of the roof. It is important to remember that not all policies offer the same coverage as just mentioned. Your neighbor’s coverage might not cover the same things that your policy does and vice versa.
Always talk with your independent agent before filing an insurance claim. We can provide personalized assistance based on your individual needs and circumstances. For more information or to request your free quotes, contact our office today. We look forward to serving you soon.
