When You Should and Shouldn't File an Insurance Claim

Fran
Fran Majidi
March 13, 2019

You were involved in a small fender bender in the parking lot of the grocery store. You can probably get the damage fixed for a couple of hundred dollars. Should you file a claim? Your wife tripped in the driveway to your house and chipped a tooth. You know this would be covered by homeowners insurance but should you file? It’s always good to ask yourself if it’s worth it before you start a claims process. We’ll tell you why.

Should I File a Claim?

Every time you file a claim, whether it’s accepted or rejected, you are causing your premium to increase. Insurance isn’t a product to buy and maximize. It was really created to take care of overwhelming costs you can’t afford to fix yourself.

When it comes to auto insurance, you always need to file a claim if you are in an accident involving another car if there were damages or injuries. You may be tempted to take care of the damages out of pocket if it was your fault but that is a really bad idea. Even if you cause the slightest damage to another person’s car, never settle it without the help of your agent and insurer. They may call and file a claim after you pay them or they may ask you for more money after they’ve been paid. They may all of a sudden have all sorts of physical injuries they claim were caused by the accident.

Can you file an insurance claim without a police report? Yes, but it's not a good idea. Always call the police and try to take photos of damages to both cars. You can consider paying for damages to your car yourself if you hit a tree or another inanimate object, but If the damage is extensive, you can file a claim on your collision coverage. Just keep in mind that your rate will likely go up.

Home insurance is slightly different from car insurance because there’s usually not another party involved, unless someone is hurt on your property and wants to file a claim. Usually, home insurance is used for major repairs to a damaged home. If you file many claims, the insurance company may hike up your rate or cancel your policy so don’t file a claim for every repair. If your policy is canceled, you’ll be hard pressed to find another insurer, and if you do, your policy may be much more expensive than the one you started with.

There’s nothing more frustrating for a homeowner than not being able to get the coverage you will need for a catastrophe so make sure that you need to file a claim before doing so. If your repairs cost less than your deductible or are a couple of hundred dollars more, just pay out of pocket to prevent a hike in rates or your insurer dropping you. And never file a claim for minor repairs, even if they are covered losses because it’s just not worth it in the long-run.

It’s important to know that if you file for damages that are not covered by your policy, the consequences are worse than rejection: You’re costing yourself money by raising your premium. If you’re not sure if you’re covered for a loss or not, it’s best to speak with your agent before filing a claim. After you get some numbers together ask yourself if it’s worth possibly being placed in a higher risk bracket than the one you’re currently in. You won’t be able to hide a claim and bounce to another insurance company either. When you file a claim, it’s documented in the Comprehensive Loss Underwriting Exchange (CLUE), which all insurance carriers check before accepting you as a client. All your claims are kept on file for 7 years.

Will I Be Penalized for Filing a Claim?

While it may seem unethical to be surcharged after filing a homeowners claim, only a few states put a limit on that surcharge. Filing for water damage may also raise concerns about mold. If you raise these sorts of red flags, you’re always putting yourself at risk for a higher rate or of losing coverage altogether. It’s not unheard of for a carrier to drop a client with water damage for fear of a second claim for mold.

In short, file a claim when there’s extensive damage to your home, and you simply cannot afford it at all.

Will I Be Penalized if I Don’t File a Car Insurance Claim After an Accident?

Car insurance is different from homeowners because you should almost always contact the police and insurer when there’s a collision with another car. Aside from the owner of the car coming to you for more money if you settle without your insurer, what looks like slight damage may end up costing thousands of dollars. It won’t reflect well on you if you don’t report it right away. Also, injuries from an accident may take a while to show symptoms. You don’t want to handle these complications on your own because it may turn into a money pit. Let your insurer/agent handle he claim. If your car is the only car damaged, your collision coverage will take care of the cost of damages and repairs if it was your fault, as long as you notify them right after or very soon after the accident.

When Should I Not File a Car Insurance Claim?

If you hit an inanimate object that doesn’t subject you to a fine, you may consider paying for the damages yourself, even if you have collision insurance. The deductible you’d have to pay in order to get reimbursed may be more than the cost of damages. Note that a surcharge (rate increase) usually lasts up to 5 years and begins to drop thereafter.

How Many Claims Is Too Many?

According to some agents, even two claims in a three-year period is too much for a homeowners insurance policy and ot may cause the insurer to cancel your policy or to penalize you with a hike in premiums. Claiming even more than that can render you uninsurable by any company.

Is Your Claim Related to a Maintenance Issue?

You should always maintain your home for many reasons. For one thing, a well-maintained home is cheaper to insure than one with the roof coming apart. Also, it’s easy for insurers to reject claims on a house that is poorly maintained. So, don’t assume that your old and leaky roof will be covered after the next storm passes. Filing a homeowners insurance claim for roof damage is one of the most common claims, but it's not always paid out in full.

And, again, read through your policy to see if a certain type of loss is covered before you file a claim. Even if it’s not covered by your policy, your claim filing will stay on your record for 7 years. Always review your policy in full (especially the “exclusions” portion) before filing to avoid penalties.

It never hurts to ask your agent for advice and questions about your home insurance policy and coverage terms. Usually agents have answers or can do some research by contacting their claims department, all without putting a claim on your record. It’s best to go this route than to be penalized when your loss is not even included in the list of coverages. Your agent will also know how many claims are too many claims and whether or not you should try to pay for repairs yourself. With all that said, you need to be careful of the agent who will be wary of being accused of not reporting a claim to the insurer. It is possible that the agent may write something on your record. Yes, it gets tricky. This is why you need to have an insurance agent that you trust and one that will always look out for your best interests. If you feel hesitant calling on your current insurance agent to do the sort of footwork mentioned here, you should consider a new quote and a new agent by visiting here.

Alternatives to asking your agent claims questions are calling the Office of Insurance Regulation in your state or speaking with a private adjuster.

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