You purchased insurance to protect yourself and your assets against the perils and uncontrollable circumstances that might result in a financial loss. While claims for major damages can save you tens or even hundreds of thousands of dollars, some claims – particularly the small ones – could actually backfire. Continue reading to learn about three reasons why some claims come back to hurt you more than they help.
Three Reasons Why Not to File a Claim
1. Because Insurers Keep Track of Your Claims History
You know about your credit report, but have you heard of your CLUE report? Like lenders, insurance companies keep a record of your claims history as well. Insurers typically report auto, home, and personal property claims to the Comprehensive Loss Underwriting Exchange (CLUE), which makes that data available to other insurance companies, too. That information follows you for up to 3, 5, and sometimes 7 years depending on your state and insurer.
The data in your CLUE report can be used to predict your future claims behavior, the insurer’s risk of issuing a policy, and consequently, the price you will pay for coverage. Unfortunately, nearly anything you have ever reported to your insurer can be in your CLUE file, whether the insurance company paid out on the claim or not. It can even include denied claims and conversations you had with your insurer about damages that did not lead to the formal filing of a claim.
2. Because the Amount of Your Claim is Smaller than Your Deductible
Some losses, such as the theft of a vehicle, will most likely far exceed the amount of your deductible. Smaller ones, such as a dented fender or hail damage, might not be so simple to calculate. In these types of scenarios, we recommend getting a damage estimate before filing a claim. You will not receive reimbursement for any personal damages that are less than the amount of your deductible, so there is no reason to turn it in. similarly, if the amount of the damage is only slightly more than your deductible, you might be better off just handling it on your own. Worse, the damages will still be reported on your CLUE report and could affect your insurance rates for years to come.
3. Because Multiple Claims Raise Red Flags
Insurance is designed to protect you against major financial losses – not to replace the cost of home maintenance. Using your coverage to try and get an old and deteriorated roof replaced after a storm might not look good to insurers if you also had a similar claim for a rotting fence that fell over under the force of a gusty wind. For insurance companies evaluating risk, it is often less about the size of a claim and more about the number and types of claims you file. Multiple small claims or claims that indicate a high-risk situation (such as multiple home burglaries) could trigger major rate hikes and even cancellation of your coverage.
Should I File a Claim?
The most important thing you can do before filing a claim is to talk to your independent insurance agent. Here at Killey Insurance, we work for our customers to provide claims assistance and helpful advice regarding personal losses. We can help you determine which claims should always be filed, such as liability-related accidents and major losses, as well as which claims might not work out to your benefit. For more information or to request your free insurance quotes, contact our office today. We look forward to serving you soon.