No one anticipates filing a claim, but when you experience a loss, the first thing you might think of doing is contacting your insurance company. It is nice to know that your home and auto insurance covers you for a wide range of events, from minor storm damage to major collisions. However, filing a claim may not always work to your benefit. In fact, there are times when filing a claim could cause more harm than good. Continue reading to learn more about the long-term effects of making claims and how your independent agent can help you navigate your coverage.
Small Claims, Big Deductible
When you make claims for damages to your personal belongings or assets, such as a car, home, or your furniture, you must pay a portion of the claim – known as your deductible – out of your own pocket. For auto insurance, this could be as much as $250 to $500 or more. For home insurance, it could be $1,000 or more. If the amount of your claim only slightly more than your deductible, you could walk away with little to show for it except a new claim on your insurance record.
This is also true of high-value items that you have not had appraised and have not itemized on your coverage. Some items, such as expensive art work or fine jewelry, are typically covered with limitations. In other words, your policy might only provide a specific amount of protection if these types of items are damaged or lost. Imagine filing a claim for your grandmother’s ring, which was stolen from your gym bag. Your personal belongings coverage might only pay $1,500 toward the loss, of which you are responsible for a $1,000 deductible. You might walk away with $500 for your loss and a new claim on your record for a ring that was actually worth much more. Your independent agent can help you make decisions about small claims and can also offer advice for itemizing valuable items on your policy to ensure they are covered in the future.
Higher Premiums and Increased Risk of Cancellation
Filing a claim could lead to unintended financial consequences that cannot be justified by the short-term savings offered by loss reimbursement. A single claim could disqualify you from a preferred policy or cost you the claims-free discount on your coverage. Before you seek reimbursement for your loss, make sure it will be worth paying an extra 10, 20, 30, or even 40 percent more on your insurance premiums. Since insurance companies can review records of your prior claims for up to 3 to 5 years, that is a bigger price you could be paying for a long time. When it comes to major losses, the rate increases are negligible. If you are talking about a chip in your paint, however, the long-term costs are probably not worth the short-term benefits.
Keep in mind, also, that if you have a history of recent claims, filing a new claim could put you at risk of non-renewal. Insurance companies will review your claims history – including claims with prior insurers – to determine their risk of insuring you. If you are deemed ‘high-risk’ due to high claims activity, it could result in cancellation of coverage.
Should I File a Claim?
Determining when to file a claim is not something you should have to do alone when your independent agent can provide personalized advice and guidance. Here at Andreotti Insurance, we can help you decide if filing a claim is the right choice for your individual circumstance. If you do not have an independent agent, why not partner with someone you know has your best interests in mind? Contact us today for your free quote and to find out more information about how we can help with the future claims you may face. We look forward to serving you soon.