Key Takeaways
- An insurance claim provides you with financial protection in the event of loss or damage.
- Filing an insurance claim may impact your rate regardless of the circumstances.
- Talk to an insurance advisor about the company’s policies on filing claims and its rates before purchasing insurance.
- Some experts advise only filing a claim for large-scale losses.
What Is an insurance claim ?
Before we look at how they affect your rates, it ‘s important to understand the nature of indemnity claims. indemnity is a condense between you and your policy caller which promises to cover you financially in the event of an emergency, damage, or loss. In switch over, you promise to pay premiums at regular intervals.
Claims cover things like medical and health-related expenses, death benefits, car crashes, and incidents related to home price. As a policyholder, you can file a claim either on wallpaper or electronically after you experience a loss or other incidental. For example, if you hit person else ‘s car with yours. you will need to report this to your insurance company if you want it to pay to have the damage fixed. You may besides be required to report the incident to your company if you were the one who was hit .
The company investigates the incident and either approves or rejects your claim. If the claim is rejected, you will probably need to cover the damage out of your own pocket. If approved, the party issues a check for the approve come to either you or to the mechanic to cover the cost of the rectify .
The Insurance Claim Game
careless of the telescope of the incident or who was at fault, the number of indemnity claims you file besides has a direct impact on your rates. The greater the number of claims filed, the greater the likelihood of a rate raise. File besides many claims—especially in a identical abruptly amount of time—and the insurance company may not renew your policy .
If the claim is based on the wrong you caused, your rates will about surely rise. On the other hand, if you are n’t at fault, your rates may or may not increase. Getting hit from behind when your car is parked or having siding blow off your house during a ramp are clearly not your fault and may not result in rate hikes, but this is n’t constantly the case .
Mitigating circumstances, such as the number of previous claims you have filed, the count of speeding tickets you have received, the frequency of natural disasters in your area—earthquakes, hurricanes, floods—and even a low recognition evaluation can all cause your rates to go up, even if the latest claim was made for damage you did n’t cause .
The decision to file a claim can have a major impingement on your insurance rates, even if the accident was minor or not your defect .
The Most and Least Damaging Claims
not all claims are created equal. Dog bites, slip-and-fall personal injury claims, water wrong, and model are red flag items to insurers. These items tend to have a veto impact on your rates and on your insurance company ‘s willingness to continue providing coverage .
surprisingly, the much-dreaded speed ticket may not cause a rate hike at all. many companies forgive the first ticket. The lapp goes for a minor car accident or a belittled claim against your homeowners indemnity policy .
Rate Hikes
Filing a claim frequently results in a pace hike that could be in the 20 % to 40 % range. The increased rates stay in effect for years, although the size and longevity of the hike can vary widely between insurers. Some may put rate hikes into impression for about two years, while others may penalize you with higher rates for about five years. If your insurance company drops your coverage, you may be forced to purchase bad indemnity, which can come with inordinately expensive premiums .
To File, or not to File ?
There are no hard-and-fast rules around rate hikes. What one party forgives, another wo n’t forget. Because any call at all may pose a risk to your rates, understanding your policy is the first gradation toward protecting your wallet. If you know your first accident is forgiven or a previously filed claim wo n’t count against you after a certain number of years, the decisiveness of whether or not to file a claim can be made with advance cognition of the impact it will or wo n’t have on your rates.
Talking to your agent about the insurance company ‘s policies long before you need to file a claim is besides important. Some agents are obligated to report you to the company if you even discuss a potential claim and choose not to file. For this reason, you besides do n’t want to wait until you need to file a call to inquire about your insurance company ‘s policy regarding consultation with your agent .
Regardless of your situation, minimizing the number of claims you file is the key to protecting your insurance rates from a significant increase. A thoroughly rule to follow is to file a claim only in the event of catastrophic loss. If your car gets a dent on the bumper or a few shingles blow off of the ceiling on your house, you may be better off to take care of the expense on your own .
If your cable car is totaled in an accident or the stallion roof of your house caves in, filing a call becomes a more economically feasible exert. Just keep in mind that even though you have coverage and pay your premiums on time for years, your indemnity ship’s company can still decline to renew your coverage when your policy expires .
How to Save on Your policy
Understanding the logic behind filing a claim only in the event of a large personnel casualty besides provides insight into how to save a few dollars on your insurance premiums. Because you are n’t going to file a claim in the event of a minor loss, having a low deductible on your policy makes no fiscal sense .
If you already plan to pay for the first $ 500 or $ 1,000 dollars worth of damage out of your own pocket, set aside that total in an interest-bearing savings history and raise your insurance deductible to match the numeral. Increasing your deductible will result in lower policy rates, and the cash in the bank will cover your out-of-pocket costs in the event of an accident .
The Bottom Line
When you pay your policy premiums regularly and on time, it may seem like you should be able to file as many legitimate claims as you want. unfortunately, the diligence does n’t work this way. Filing excessively many claims or certain kinds of claims can have an adverse effect on your policy rates or even get your policy canceled all in all after the claim has been paid .
To avoid unfair rate hikes and unpleasant fiscal surprises, make sure you learn the most you can about your insurance company ‘s policies and industry practices long before you ever need to file a claim .