When Filing an Insurance Claim Can Hurt You

If you've ever had a minor 'fender-bender' with another motorist, (or with a stationary object), you probably wondered if you should file a claim or not. If you're a homeowner, you may have wondered the same thing about those few hail dents in your siding, or some other minor homeowner peril. You're not alone. Thousands of people file minor insurance claims for personal property every day. Many times the claim is not necessary, and sometimes it can be costly. Every time a claim is filed, your insurance company will pull up your claims history.

So when should you not file an insurance claim? Let's look at a few examples for both the automobile and the homeowner policy.

Auto:When you have a minor accident, first consider what happened. In a clear liability scenario, the insurance company knows who is at fault and does not require an investigation to determine this. Two examples of a clear liability claim are; when your parked vehicle is hit and when you are rear-ended.

In either of these two scenarios, if you can identify the at fault party and they have valid insurance you can file your claim directly with their insurance instead of yours. The only time you cannot do this is if you are a resident of Massachusetts. In that state everyone must file through their own insurance company.

If there was no other party involved in your accident, consider your damages before you jump on the phone to file that claim. Many policy holders believe the insurance companies want/need to know about every little incident involving their vehicle. When there's no one else involved (scraping your bumper while backing out of the garage) the insurance company really doesn't need to know. First take your car to a local body shop and let them write you an estimate. Most shops will do this for free in hopes of getting your repair business. If your estimate is less than your collision deductible, don't file the claim. (And yes, hitting a stationary object is a collision claim, not comprehensive).

Your insurance company is going to close any claim that doesn't exceed your deductible. So for a scrape on the bumper that a shop can buff out for $250, where your deductible is $500, you'll be paying for it out-of-pocket with or without a claim. If you do file a claim, your insurance company now has a claim record established on your policy and can use that to raise your premium in the future. If it's your first and only claim, it probably won't affect your rates, but if you've had claims in the past 3-5 years, it very well could. Now you're $250 scratch can end up costing you over $600 in repairs and increased premium.

Damages to Your Home:What about your home? Does the same rule apply? Basically, yes. If the deductible to your building (the house itself) is $500, and your toilet overflowed onto your ceramic tile flooring, you may not need to file a claim. In fact I hope you don't. The insurance company is not going to pay for the plumbing repairs, so forget about that. Chances are, the water will not damage your ceramic tile significantly enough to warrant a claim either. Unless you like outhouses, you're going to have to fix the plumbing anyway, regardless of coverage.

On the other hand, if you have carpeting, wood or laminate flooring with standing water, you may have coverage for restoration services. This is still going to be subject to your deductible, so find out what that cost will be first. If it exceeds your deductible by more than a few dollars, by all means file the claim.

In both automobile and homeowners insurance, being smart about your claim habits equates to being smart about your money. Do a little investigating first and determine what the long-term cost of the claim will be before you run to your agent.

Sources: Industry knowledge as an agent www.insurance.com