Filing an insurance claim seems simple enough. You call up your carrier, prepare to speak with an adjuster, and wait for the claim to be paid. Continue reading to learn how different claims can affect your insurance and what you can do to protect yourself against undesirable consequences.
Filing a Claim is Not ‘Cashing In’ on Your Policy
Insurance should not be considered an investment that you hope to get a return on. Instead, it is the foundation on which you build your financial future and protect everything you have worked so hard to attain. When you use insurance for major claims, such as the loss of your home in a fire or the replacement of your vehicle after a collision, you protect yourself against a loss that could otherwise result in years of financial setback. Sure, you might pay a little more for your premiums after the claim, but the increase is insignificant compared to the value of your loss.
On the other hand, using your insurance to cover every small expense could actually cost you in the long run. When you have a claims-free history, insurers often reward you with special benefits, such as a preferred policy or a claims-free discount. Just one claim might disqualify you from such benefits, which could otherwise be saving you hundreds of dollars per year.
Several Small Claims > One Big Claim
Every insurance company is different and uses a different formula to evaluate your risk. However, many insurance companies consider the number of claims in your history to be much more important than the size of a single claim. When insurers look at your record, they may assume that you are likely to make additional claims in the future if you already have multiple recent claims. This puts you at risk of a higher premium, and sometimes, non-renewal or cancellation of your policy.
Depreciated Assets and Coverage Limitations – What Does It All Mean?
Your insurance provides coverage based on replacement or actual value. Replacement value means that you will receive the money necessary to replace your loss with a new, comparable item. Actual Cash Value (ACV) coverage, however, only covers the depreciated value of your loss. Always talk with your agent before filing a claim to find out how your loss will be covered. You might find that filing a claim for a severely depreciated asset is not worth the trouble and expense of a rate increase.
There are also certain items in your policy that may have only limited coverage, regardless of whether your insurance pays for the replacement or actual value. Often, this includes fine art, furs, jewelry, and firearms. Unless you have your items appraised and itemized, you might only be covered up to a specific amount. If you file a claim for a stolen or damaged item with limited coverage, you might be disappointed to find out that you will only recover a fraction of what you paid for it. We recommend purchasing scheduled coverage for any high-value items, and always find out the details of your policy’s coverage before filing a claim.
If you have questions about a claim, we encourage you to contact us first before you file. We can help you better understand how a claim might affect you both today and in the future. If you are not yet a customer of Skeele Agency Insurance, we invite you to experience the personalized service that you cannot find when shopping for coverage online. Contact us today for more information or to request your free quotes. We look forward to serving you soon.