You would be hard-pressed to find a good reason not to have great insurance. After all, it is the foundation for a strong financial future by protecting your assets and your future income. While having the right coverage can be just the safety net you need after an unexpected loss, it is important to understand your coverage and how best to use it to your advantage. In other words, filing the wrong claim at the wrong time might just cause more harm than good. Continue reading to find out when filing a claim is a good idea, and when it is not.
When Filing a Claim is Important
Certain types of financial loss – particularly liability involving injuries to other people or damage to their property – are always grounds for contacting your insurer. Even a small collision could result in thousands of dollars in property damage liability, not to mention the cost of any lawsuit that may occur as a result of injuries. Factor in a claimant’s lost wages, medical bills, pain and suffering, and legal costs, and you are probably happy to hand off the financial responsibility to your insurance company. This is also true of major personal losses that are valued much higher than your deductible. Your insurance company can help pay for repair or replacement of your car, home, personal belongings and more if they are damaged, lost or destroyed due to a covered event.
When Filing a Claim Could be a Mistake
There are some cases where filing a claim is an option, but probably not the one that serves your best interests. These typically include small personal losses that cost little more than your deductible and do not involve loss or injury to anyone other than yourself. Examples might include denting your bumper on a fence post or noticing a small patio awning that collapsed under the weight of ice or snow.
On the surface, it could make sense to pass off the bill for small losses to your insurer. However, you could end up paying for it in the long run. Typically, a claim will result in an increase in your premiums that could last for several years. In fact, some insurance companies will review your claims history for as much as 3, 5, or even 7 years when determining your insurability. A history of recent claims – even small ones – could present a higher risk to the insurer, which is in turn passed on to you in the form of higher premiums.
Even if you are not concerned with losing your claims-free discounts or preferred rates, there is another reason to reconsider filing a claim. The fact is that too much recent claims activity could trigger non-renewal or even cancellation of your coverage. This is true even of small comprehensive claims. If you have multiple small claims for things like rock chips and hail damage, the number of your claims – not necessarily the amount of your claims – could affect your ability to obtain or maintain coverage with a provider.
Should I File a Claim?
You should never be afraid to file a claim if you need to. After all, that is what insurance is for. However, it does pay to be more cautious about the types of claims you file and the frequency with which you file them. The key is to work with an independent agent who can assess your individual situation and provide personalized claims guidance according to your claims history, your deductible, and the type and size of your loss. If you do not have an independent agent, there is no better time than now to find out how the team here at Smith Insurance and Financial Services can help you better navigate your claims. Contact us today for more information or to request your free quotes. We look forward to serving you soon.