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Factors to Consider Before You File a Claim (Spring 2007) << Back
 
Most of us have had insurable homeowner's or automobile losses at one time or another and wondered whether or not to file a claim.   The two questions that run through one's mind during such trying times are fairly uniform - If I file a claim will my insurer raise my rates?  Or - will they drop me like a hot potato?   
 
Small claims under $500, generally will not affect your individual premiums if they are few and far between. Insurers vary, however, in their underwriting of accounts with losses, particularly "at-fault" losses. Two or three claims a year on a given policy will signal to most insurers that you are a problem insured.  To complicate matters, you need to consider the effect of even one claim on your ability to obtain insurance elsewhere.  Some companies take a long hard look at any applicant who has had claims with their current or previous carriers in the past three years. 
 
Everyone should be aware of one method used by most insurers in the underwriting process for personal lines applicants - the use of a shared database called CLUE (Comprehensive Loss Underwriting Exchange).  This database is tapped by insurers not only to investigate the applicants for insurance, but in the case of homeowner's insurance, the property as well.  Participating insurers report all claims, large and small, even ones not resulting in a payout.  You need to know that your record is affected by the reporting of the claim much in the same way that your credit is affected by late payments or financial default.
 
So when should you file a claim with your auto or homeowner's insurance? Common sense says if the repairs cost less than the deductible, you're better off paying for the repairs on your own. With this in mind, you may even want to consider taking a higher deductible on your insurance to lower your rates. Take the money you save on the lower rates and deposit it into a savings account. In the event you are involved in an accident, you will have the money for the repairs even if the cost is slightly higher than your deductible.
 
If you have an automobile accident and there is another car involved, or there is someone else in the car with you, you definitely need to let your insurance company know about the accident - regardless of deductible or repair costs.  This is the same with a guest that slips and falls in your home.  This protects you and your insurance company, as you can never be certain if the other driver, additional passenger or any other third party will decide to file a claim at a later date. When someone else is involved, it is important to get your side of the story on record with your insurer and, in many cases, the police as well.
 
Keep in mind that each claim scenario is different and has different implications for you as an insured.  If your windshield cracks as a result of a stone hitting it on the highway, your insurer will consider it an "act of nature" and will not assign fault to you as the driver.  On the other hand, if the damage is only slightly higher than the deductible and the claim comes close on the heels of another recent and more serious claim, you may do well to bite the bullet and pay the difference out of your own pocket.  Do not let indecision or carelessness prejudice your ability to rely on the coverage you may one day desperately need. 
 
If you have any questions, please feel free to call AHTKY as we can help you assess the likely costs and benefits of filing a borderline claim. 
 
 
 
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AHTKY Insurance Agency, LLC
1451 W. Artesia Blvd, Suite A, Gardena, California 90248
CA License: 0C46036