Should you file an insurance claim every time you have a covered claim? The answer may not be what you think it is. Keep reading to find out what you should ask your insurance agent.
Should You File a Claim?
Whether you should file a claim depends on how big your claim is. If it’s less than your deductible, you won’t receive any reimbursement. If it’s only a little above your deductible, the amount you get may not be worth the hassle of filing a claim and potential future insurance consequences. For more significant claims, use your insurance, because that’s why you bought it.
Will Your Rates Go Up After You File a Claim?
There are two types of rate increases you might see after you file a claim. The first is in the actual rate that your insurance company quotes you. This isn’t the same for all customers and depends on how risky the insurance company thinks you are. After you file a claim, the insurance company may believe you are riskier and raise this rate.
You may also lose the preferred status or discounts that you had for having a claims-free history. These are typically listed as separate subtractions from your base rate rather than in the rate itself.
What Types of Claims Make Your Rates Go Up?
Not all claims affect your rates equally. Some may not affect your rate at all, while others could cause a significant increase.
The first thing insurance companies look at is the type of claim and how avoidable it was. For auto insurance, glass claims usually don’t increase your rates, minor accidents raise your rates a little, and major accidents where police cited you bring significant rate increases. For home insurance, you might see no increase for storm damage but a significant increase for a fire caused by your negligence.
The other thing insurance companies look at is how many claims you have. Even for smaller claims that wouldn’t raise your rates on their own, having several claims in a short period may cause insurance companies to consider you a higher risk and raise your rates.
How Long Does a Claim Affect Your Rates?
Each company has their own policy for how far they look back. It could be anywhere from three to seven years. Insurance companies share claims information, so you can’t reset your claims history by switching providers. However, if your current insurance company looks back longer than others, you could save money by switching after a few years.
Will Your Insurance Company Cancel Your Policy for Filing a Claim?
An insurance company can cancel your policy, but it’s much less likely than a rate increase. The most common reasons are for an excessive number of claims or for a single very serious claim. Remember, this is a rare situation, so if you have one average claim, you probably have nothing to worry about.
Talk to Your Insurance Agent
Your insurance company can review past claims and get quotes from other insurance companies to see how a claim might affect you before you decide whether you want to file your claim. Contact Long & Company to get help.