After the dust settles when you’ve had a car accident or loss to your home or your business, it’s time to call the insurance company. Many consumers have multiple questions about filing an insurance claim like how much it will cost, will their premiums increase, and what are the negative consequences of filing a claim? These are all perfectly legitimate questions and there are many factors that play into each claim on a policy. Specifics should be discussed with your insurance agent, but we’ve provided a quick checklist to review before filing an insurance claim:
Truly analyze the size of your loss
If it’s not obvious, it may be worth thinking twice about the amount of your loss. Obviously if you have a $20,000 car wreck or a complete home robbery, you need to submit a claim, but what about a car dent or a cracked windshield. Generally, the golden rule is where your deductible lies. If the auto body shop is going to charge you $200 for a door dent it’s not worth submitting your claim, you may end up paying more than that over the next year in premium increases. Sometimes it just makes sense to pay your loss yourself and avoid the consequences of submitting a claim.
The Deductible Game
Your deductible has a direct impact on whether you should submit your claim or not. If the damage is near or less than the cost of your deductible, there is no point to submitting a claim. With $1000 deductible, and $500 worth of damage, you’ll end up paying the $500 whether you submit the claim or not, so avoid increasing your rates and don’t file the claim. When the loss is just slightly more than your deductible, it gets a little trickier and it’s up to you to determine whether it’s worth submitting a claim for $1,200 and getting only $200 from the insurance company. At this point, it is a good idea to call your insurance agent and determine exactly what your premium increases would be and what the consequences of filing a claim are. You may find that it’s less costly for you to pay the additional $200 out-of-pocket and keep the claim off your policy.
Is anyone hurt?
When it’s property damage only, it sometimes makes sense to take care of it yourself and avoid the consequences that come with submitting the claim. However, when someone’s injured it is necessary to file a claim regardless of how minor the injury is. The injured party can come back and sue you many months or even years later and you don’t want to have to deal with that on your own if you didn’t report the claim when it occurred. Your policy requires you to report your claims promptly so the company can control the claim. If you don’t, they can deny coverage.
Company Rules and Practices
Every insurance company is different so it is important to contact your agent when deciding whether to file a claim. Each company has their own rules, practices and rate plans. Some companies will keep you insured no matter what, others can issue a non-renew on your policy. Some may have incentive programs for not filing a claim and your agent can help you navigate through the individual policies of your company.
Insurance, and the price you pay for it, is based on risk, if you appear to an insurance company to be a risky consumer, your rates will increase. You want to keep your risks low by keeping your claims history minimal. Of course insurance is there to protect you, but the key is to use it wisely.