You purchased insurance to have a safety net in case of financial disaster. Perhaps you spent time consulting with your independent agent to find just the right coverage to meet your needs. Now that you have experienced a loss, the next step is to file a claim, right? While your home, car, and other insurance policies can provide coverage for a broad range of losses, filing a claim may not always be in your best interests. Before you claim a loss, contact your agent to find out the right solution for your particular situation.
The Risk of Non-Renewal
Most insurers give more weight to the number of claims you have made than the total amount of those claims. As few as two or three claims over the past three, five, or even six years may be enough to disqualify you from coverage. Since insurance companies share information about your claims history with each other, this data is likely to follow you to any insurance company you apply for coverage with in the future. While that should not deter you from using your insurance when you need it (that’s why you have it), it should cause you to think twice about whether saving a few dollars out of pocket is worth having a new claim on your record.
Higher Premiums
Filing a new claim can also have unfavorable effects on your premiums. Though every insurer treats accident claims differently, just one claim could cause premiums to rise when your policy is renewed. There may be an exception for your first claim, however, if your policy includes some type of accident forgiveness. However, you could still see an increase in the cost of your coverage if you are currently taking advantage of a claims-free discount. That is usually the first benefit lost, which could increase your rates by as much as 10 to 20 percent.
Should I File a Claim?
There are certainly times when filing a claim for damages or losses is the most appropriate course of action. For example, you should file a claim if you cause an accident that results in some type of injury or property damage liability for another person’s losses. Likewise, you would file a claim for a major house fire or for a collision that results in total loss of your car.
On the other hand, you might not need to file a claim for small personal loss that does not involve anyone else. Consider, for example, someone who smashes the side mirror on their vehicle while backing out of a garage. The damage repair estimate is just $650, but the deductible is $500. While filing a claim could save the driver $150 in upfront costs, it is likely to cost much more in long-term insurance premium increases.
Of course, a claim that might be right for one person could be wrong for another. At the end of the day, we believe this is just one more reason to have an independent agent that you can provide personalized advice and guidance after an accident. If you do not yet have an independent agent, contact the team here at Wolfgram Insurance. We can help you better understand your options and how a claim might affect your coverage. Call us today. We look forward to serving you soon.
