If you get into a car accident, a tree falls on your house, or some other mishap costs you money, should you pick up the phone and call your insurance company?
What Happens if You Don’t Make a Claim?
Before you think about if it is worth making an insurance claim, make sure you understand what happens if you do not make a claim. Most insurance policies have deadlines that you need to report an incident to be covered. Assume you got into a car accident that you thought was a minor fender-bender with only a few hundred dollars’ worth of damage. You do not file a claim, and after the claim deadline passes, your mechanic finds a severe problem with one of your axels or you start experiencing back pain, your doctor ties this back to the accident. If too much time has passed, your insurance company may not be able to help you.
What Happens if You Do File a Claim?
If you do file a claim for a covered incident, your insurance company will reimburse your covered costs up to your policy limit. For example, if your $250,000 house burns down, your insurance company may write a $250,000 check to rebuild your home. Of course, you need to subtract your deductible. But what if your claim was slightly greater than your deductible? Would it still be worth filing a claim?
Does Filing a Claim Increase Your Rates?
The only thing that is close to certain is that filing a claim will not make your rates go down. Your rates are based on what the insurance company thinks the risk of filing a claim is. Depending on the type of claim, filing a claim may make your rates go up. If it is something you control, such as poor driving habits, you can expect that it is more likely to see an increase. If it is something like a deer sprinting in front of your car, you will probably see a smaller increase if any.
Even minor claims can add up when they keep happening. If you hit multiple deer, the insurance company may decide you drive too fast on roads that are more susceptible to deer. This too may cause an increase in your rates.
How Long Does a Claim Stay on Your Insurance History?
When insurance companies set your insurance rates, they look at your claims history with all insurance companies. If you have a claim at one company, you cannot go back to a claims-free rate by switching to another company. Most claims stay on your insurance history for three to five years, but some insurance companies will go as far back as seven years. Since each insurance company treats claims differently, rate shopping can help even if they all know about the claim.
How Can Your Insurance Agent Help?
Your insurance agent can help you figure out if you will get more money by filing a claim or by avoiding a claim to keep your rates down. Contact innovante insurance to get help with a more competitive quote.
