You may have heard that your insurance rates will go up if you file a claim. Maybe you have experienced this yourself. Perhaps you even know someone who had their policy canceled unexpectedly. From auto and home insurance to other types of insurance, having claims plays a major role in whether you will qualify for coverage, as well as how much you will pay for it. While you should not worry about filing claims for your losses, it does help to know how doing so might affect you in the future.
Yes, Your Rates May Go Up after a Claim
Although regulations vary by state, and policies are different from insurer to insurer, it is possible for an insurance company to place surcharges on your premiums if you have a history of claims. Often, just one claim is enough to trigger a premium hike and the removal of any claims-free discount you may have been receiving. That could mean spending hundreds more on insurance each year for the average driver with just one claim filed in the previous 3, 5, or even 7 years. Unfortunately, claims activity is reported to consumer reporting agencies. That means that all insurers can access your past claims activity and use the data to assess their risk of providing you coverage.
Surprisingly, the size of the claim is not necessarily as important as the type of claim or the number of claims. If you drive intoxicated and injure another person in the process, your insurer will probably view the personal injury claim much more seriously than if your lawnmower shoots a rock into the windshield of your car. Likewise, having multiple small claims may be frowned upon more heavily than having a single catastrophic one. Insurers may assume that an active claims history is a good sign that you will continue to file claims in the future. That could lead to non-renewal of your policy or even cancellation.
How Do I Know Which Losses to Report to My Insurer
There are no hard and fast rules determining which losses should be reported and which ones should not. Technically, you can claim any loss that is covered by your insurance. However, filing a claim for some losses might make more sense than others. For example, you probably want to avoid claims with losses that are valued just slightly higher than your deductible. While filing such a claim may result in a small benefit, it may also result in higher premiums due to the claim. (Note: Loss valuation is determined by the insurer and the details within your policy.)
On the other hand, you should probably contact your agent about all incidents involving other people. If someone is injured or you cause damage to another person’s property, you might be at risk of a lawsuit. Liability insurance helps protect you against expensive litigation that could otherwise drain your savings or cause years of financial hardship. It is up to you to report any possible liability in a timely way to ensure you are covered against future claims – even if you are sued several weeks after the incident occurs.
Keep in mind that your independent agent is your most valuable resource when it comes to filing a claim. Don’t ask yourself, “should I file a claim?”. Instead, ask your agent. Here at Frydach Insurance, we enjoy helping our customers learn how a particular claim might affect them long-term. As your insurance advocate, we can help you assess your situation based on your loss, your deductible, and your existing claims history.
Working with an independent agent has its perks. We offer services not available when you shop online. For more information about claims assistance or to request your free quotes, contact our office today. We look forward to serving you soon.