Many people buy insurance but then don’t want to make a claim when the time comes. The fear is premium increases or having their policy canceled, but what’s the point of having insurance if you don’t use it? Yes, you should think about whether filing a claim is worth it, but don’t let your insurance go to waste. Keep reading to learn what you should do.
What’s the Point of Insurance?
The point of having insurance is to cover significant financial losses that you either wouldn’t be able to cover on your own or would set your other financial goals too far back. That can include things like rebuilding your house if it burns down or getting a new car if yours gets totaled in an accident. It can also cover claims that are only worth a few thousand, or even a hundred dollars that would blow a hole in your budget. If you wouldn’t feel comfortable just taking the money out of your savings account, you probably want insurance to cover it.
What’s Your Deductible?
You should also think about your deductible. When you buy your policy, you should set your deductible to that amount you’d feel comfortable covering from savings. But what about if you have a $1,000 deductible and a $1,100 claim? Insurance would typically only cover the extra $100, so you’d need to think about if it’s worth it.
Will Your Insurance Rates Go Up After a Claim?
When you file an insurance claim, there is a chance your rates will go up, but it depends. The insurance company isn’t mad at you for submitting a claim. They’re trying to figure out the risk of you having more claims in the future, and people who have had previous claims are statistically likely to have future claims. If they decide you’re riskier, your premiums will go up. You could also lose discounts or preferred status that you had for having a claim-free history.
The type of claim also matters. The insurance company might see an auto glass claim as the luck of the draw, while your dog biting someone could be taken as a much higher level of risk.
How Long Will Your Rates Stay Up if They Go Up?
If you do have a rate increase because of a claim, the length of time also depends on several factors. The typical range is anywhere between three to seven years, depending on the insurance company, type of claim, and your location. Again, insurance companies are trying to figure out how risky you are, so the longer it’s been, the more they’ll see your risk as dropping back down.
Insurance companies usually share claims histories, so you can’t avoid a claim on your record by changing insurance companies. However, switching may still be the right move if you find an insurance company that has a smaller increase for your type of claim or “forgets” claims sooner.
How Do I Know What to Do?
If you’re thinking about filing a claim or want to know if you can get a better rate after filing a claim, talk to your insurance agent. Your insurance agent can run quotes under different scenarios and help you find the best price so you can make an informed decision. Awesome Insurance Consultants is ready to help. Contact us now.
