Questions and small claims can cost you.
What most people don’t know is that with many insurance carriers, actually talking to them about small claims or even potential claims can cost you. Why?
It’s all about the risk.
Insurance companies are always looking for ways to manage risk. They actively look at profiles of their customers to help determine who is more likely to be a higher risk to them for claims. If they consider you a higher risk, that may mean higher premiums, getting dropped or even being unable to get coverage from certain carriers. So what does that have to do with asking questions of my carrier?
Questions can be harmful.
Here’s a scenario: you have windstorm and it causes a little issue at your home. You call your carrier directly and discuss if that type of thing is covered. With some carriers, this may be recorded and treated the same as actually filing a claim. “Ask questions carefully, and try not to call the company. If you need to call your insurance company, don’t talk about any damage to your property unless you are going to file a claim. In some states, calling your insurance company to ask about making a claim may be treated the same as a property loss. Know what your homeowners insurance policy covers and the deductible. Remember, do not call your insurance company unless you plan to file a claim and know your losses will be covered.”
Small Claims- Are they worth it?
You have insurance- so why not use it? Well, there may be more more to that story. First, if you file a lot of smaller claims, the insurer could consider you “higher risk” and may charge you higher premiums on renewal. In some cases, the increased premium amounts over time can be of greater cost to you than simply paying the claim directly. Second, some carriers could actually drop you for too many claims, if they determine the risk to be too high that you are likely to continue to file more claims. Additionally, some carriers may not be willing to insure you at all if they determine you’ve had too many claims, even if they are small.
What do you do?
Know your insurance policy. Know your insurance coverages and deductibles.
Work with an agent who can help educate and support you. They can advise you on the best ways to manage risks.
Consider using the highest deductibles that you can afford. This will reduce your premiums. Set aside this savings to pay for small incidents if they occur.
Speak to your insurance agent to learn more. Or reach out to us and we’d be happy to answer any questions you may have at www.keslarinsurance.com.
Some Sources:
http://www.wsj.com/articles/SB106380332733463200
http://www.illinoislegalaid.org/index.cfm?fuseaction=home.dsp_content&contentid=2136
http://www.uphelp.org/pubs/claim-or-not-claim%E2%80%A6that-question-david-shaffer
