When is the right time to file a claim and when is it best to not?
When trying to decide if you should file an insurance claim or pay for it out of pocket, the answer is not always clear-cut. There are a few things to consider before proceeding.
?First - will filing this claim cause my rates to increase?
?Next, if my rates are increasing, how much will the increase be?
?Then finally, will filing this claim mean that I will get dropped or cancelled at renewal time?
Beginning with the first question, will filing this claim cause my rates to increase? Unfortunately, there are no hard-and-fast rules in the insurance industry on this since insurance companies are regulated by the States and they all have their own set of underwriting rules they follow. Some companies will slap a surcharge faster than you can say ouch, some will wait and review the policy at renewal, then decide on a rate increase, while others will not penalize you at all for a claim.
If your rates are increasing; how much? This is a company specific question and partially based on your own individual history. Depending on the company you are with, you might have an accident forgiveness plan and face no penalties the first time you experience a claim, or you might be with a company that doesn’t mind consumers with claims history since they also charge rates accordingly. This is a good question to ask your agent before filing any claims.
Most agents have a company that will never drop you, increase your rates yes, drop you no. So it will depend on the carrier you are with and their state underwriting rules. This is why it’s best to call and discuss this with us if you have any questions about your claim, especially if you have had one or more in the last few years.
Below are a few examples and suggestions to use when you are determining if you need to file a claim.
Times when you should file are...
It's BIG. The purpose of insurance for consumers is to protect them from huge financial disasters, not little bumps in the road. Experts agree it is not wise to make small claims, although they disagree on what small means. I say, it will depend on what you can afford to pay out of pocket. This is where your local agent (like me) can help you decide on the best deductible for your situation, which also helps lower your rate.
There are injuries or potential injuries to others. If there's a chance someone else in the incident could claim they were injured, file a claim to protect yourself from an injury lawsuit. Not filing a claim can lead to potential denial by a company, so don’t gamble, if someone’s injured turn it in.
You were obviously at fault; such as a car accident where you are distracted and rear-end the car in front of you. The faster you call in the faster the ball gets rolling and things get fixed.
Don't file if...
Your deductible is higher than the value of your claim. Your deductible is the amount you have to pay before your insurance kicks in. Most agents agree, “If a claim is only a couple hundred dollars over my deductible, I would probably absorb that myself just to keep my insurance record clean". Examples of this are backing into the neighbors’ mailbox or running over a kid’s bike.
You have recent moving violations. Some auto insurers will use driving violations as factors to raise your rates, especially if you filed claims too. This could lead to double whammy, surcharges for an accident and surcharges for moving violations.
You've had other recent claims. Filing several claims in the same year can move you into a non-standard tier and possibly lead to being dropped. So, if you're facing numerous claims, you might want to pay one of the smaller ones out of pocket.
Maybe file if...
If an auto accident is clearly the other driver's fault, you might want to file a claim to protect yourself in case that driver is uninsured or underinsured. Hint, if you call their insurance and they say, he hasn’t had insurance here in ages, you might want to file on your policy so your insurance can fix your car and then they will go after the other driver. Your claim will be subject to your deductible but if they are successful in the suit, they will refund you, your out of pocket expense.
Things you should know
Be cautious about what you say, asking general policy questions about claims scenarios isn’t against the law. Telling your agent you had a claim and are trying to decide to file can cause an issue. Some agent company contracts state they are obligated to note in your file that you had an incident, even if you never file a claim. That alone could increase your rates.
However, always keep in mind, your agent is also the best person to help you evaluate your options, so talk to your agent about the insurer's practices.
You may want to raise your deductibles. It's generally unwise to make lots of small insurance claims. So you might as well raise your deductibles and pay lower premiums.
I would suggest $1,000 minimum deductible on your auto and as high as you can stand on your house. This keeps you from even thinking about making small claims and saves you quite a bit of money.
Before you shop around get a copy of your Comprehensive Loss Underwriting Exchange (CLUE) report. This will tell you what an insurance company knows about your claims history. Access free reports for personal property and auto at ChoiceTrust.com.
I would be remiss if I didn’t remind you of a few legal issues here at the end.
Insurance is regulated by the States so each state can have different laws, if you are in an accident away from home, its often better to just file a claim since distance might complicate the situation.
Nothing in this report is meant to offer legal advice, if in doubt turn in your claim. Your policy requires you to turn in a claim promptly or they can refuse to defend you so especially if anyone is hurt, turn in your claim as quickly as you can.Back to Top