Do you really want to file an insurance claim?

We all have a different view of insurance in Maine and New Hampshire and when to use it. Something happens, you file an insurance claim. “Hey, I paid my insurance premiums and I want some of that money back for the damage to my house.” It’s a normal reaction.
The choice to file a claim, though, can have unintended consequences and long term costs. If you have too many claims, your insurance company could raise your rates or refuse to renew your policy – even for business insurance.

Let’s say you have a $500 deductible for your home insurance– the deductible is the amount you have to pay first before the insurance company pays the amount they promise to cover. One morning, you discover that a broken hose on the clothes washer has damaged the carpet in part of your basement family room. The cost to clean the basement and replace the carpet is going to be $1,200. If you file a claim, you’ll pay $500 and the insurance company will pay $700. Your claim will be added to a central database that is accessible to all insurance companies. To find out what your insurance history looks like, go to ChoiceTrust.com and access a free CLUE report – that stands for the industry’s Comprehensive Loss Underwriting Exchange.

Why should that matter?

If you have made a number of claims over the course of a year or two, your claim history is going to raise a flag. Like any business, insurance companies try to make a profit but it’s hard if they are paying out as much or more than they’re taking in. That’s why they attempt to know how much risk they are assuming when they agree to sell you an insurance policy. That risk assessment is calledunderwriting. If you have had multiple claims, they could charge you higher premiums.

Most people view insurance as coverage for “the BIG one” such as a fire or major wind damage to a building, an auto accident or liability claim. Having a series of smaller claims on your record suggests you could be a high risk for continued claims and, perhaps, claims of larger value in the future.

However, if you are in an auto accident in which someone was injured or could claim to have been injured, you should notify your insurance company as legal costs can accumulate very quickly. Liability coverage will pay for a lawyer to defend you or prove that you weren’t at fault.

As we’ve written previously, insurance is both simple and complex. It’s simple to pay your premium but it’s complex to understand your coverage and what goes into determining your costs. That’s why you should sit down with us at Clark Insurance to fully understand your options and how best to manage your insurance program.

At a minimum, think about how high you want your deductible and find out what the savings would be the higher you go. If you choose a high deductible, be sure it is a cost you can cover without too much personal risk. And of course, we can help. We know more so you can worry less.

Photo by CarbonNYC [in SF!]