When a kitchen fire causes smoke damage throughout your home, you expect your insurance company to pick up the bill for repairs. You expect this because it is the very reason you purchased insurance in the first place – to protect you against major monetary losses that might otherwise result in years or even decades of financial setback. Of course, your insurance policy is good for more than just the big stuff; it can handle the small claims, too. But before you ask your insurance company to pay for the kayak that was stolen from your garage or the taillight you smashed last weekend, continue reading to find out how a small or unnecessary claim could come back to haunt you in the future.
Rate Increases
After years of faithfully paying for insurance, filing a claim might feel like finally cashing in on all those premiums. Unfortunately, a claim could result in higher rates when the time comes to renew your policy. Insurance companies have the right to place a surcharge on your premiums as a result of any claims you may have filed. The higher rates could stick around for a while, too. Since claims are typically reported to consumer reporting agencies, you could continue to pay higher premiums for up to 3, 5, or even 7 years after you file a claim, depending on the insurance company and your state.
Even if your insurance policy includes some type of ‘accident forgiveness’ for a first-time claim, you could still pay the price. While the insurance company may not raise your actual rate, you might see your claims-free discount disappear, which results in higher costs for your premiums.
Non-Renewals and Cancelations
What would you do if you received a letter from your insurer informing you that your home or auto insurance policy will not be eligible for renewal once it expires? This is the reality for many people when they make too many claims in too short a period of time. For insurers, making several claims – including small ones – can raise a red flag. They might assume that your prior claims activity is indicative of your future claims behavior and decide to drop your coverage altogether.
Of course, insurers often take into consideration the type and severity of the claim. For instance, a dog bite liability or water damage claim might be viewed more seriously than a rock chip repair or damage to your vehicle if you hit a deer. That is why you should always talk with your independent agent before filing a claim to ensure it works out to your long-term benefit.
When Should I File a Claim?
You should not hesitate to file a claim for any incident or accident that involves another person. It is your responsibility to report accidents to your insurer in a timely manner, or else you might be personally responsible if a victim decides to sue you several weeks later.
You should also utilize your coverage for any major personal losses you experience – specifically those that are far and above the cost of your deductible. If you have a $500 auto insurance deductible, it is probably not worth adding a claim to your record if you need a simple windshield replacement. On the other hand, you probably should not hesitate to file if your vehicle is stolen or totaled in a collision.
At Patriot insurance, we help customers like you navigate the complexities of insurance coverage and help you decide whether filing a particular claim makes sense for your situation. If you are not yet a customer of Patriot Insurance, let our team offer you the personalized service you cannot find online. Call us today for more information or to request your free quotes. We look forward to serving you soon.
