5 Things to Consider Before Reporting a Claim

By: William Forbes

Reporting a claim is not always as simple as calling your insurance company and receiving compensation. Claims, whether they are small or large, affect your insurance policy. Below are five things I recommend my insureds consider before reporting a claim. I point these items out because it’s important that customers understand when and why they should report a claim. Educating yourself about the claims process means being a savvier insurance consumer. 

1.       Report the claim immediately to your insurance agent or company.

The official guidelines for reporting a claim differ from company to company, so it’s important to check in with your agent or insurer to understand how quickly you need to report a claim. However, as a good rule, it’s important, whichever company you are with, to report claims as soon as they happen. This leaves less chance that details will be forgotten, and reduces the chance that there will be any questions about the claim’s authenticity from your insurance company.

2.       Is the claim cost larger than your deductible?

If the claim is not larger than your policy deductible, there is really no reason to report it. In this case, you are financially responsible for the cost of the repair, and there is no benefit to involving the insurance company. You don’t want a reported claim on your policy when you aren’t receiving any financial assistance from your insurance company.

3.       Can you handle the claim financially?

Simply put, insurance policies aren’t home- or car-maintenance accounts. Insurance is for catastrophic losses. Or, in other words, losses that create a significant financial hardship. Though insurance will pay for minor claims, you may end up hurting yourself in the long run, as multiple claims will drive up the policy premium.  This means you pay more for your insurance plan each year. Additionally, multiple claims increases the likelihood that your insurance company could cut your policy altogether.

4.       Often claims raise the annual premium of your policy.

Though many companies today have accident or claim forgiveness, which means your rate won’t increase for your first claim, it is important to understand how claims generally affect your overall policy premium.  The number of claims reported, along with the severity of each, can adversely affect the total price you pay for insurance.

5.       Claims stay on your policy record for a specified period of time.

Auto claims typically stay on your record for three years. Home claims stay on your record for five years. Having claims on your policy record can affect you when you shop for insurance. They often make it harder to receive the best possible rate, and certain companies will not accept new insureds with multiple claims.  

There is much to consider when deciding whether to report a claim. The best advice I can give is to talk to your agent about each claim. Agents are there to provide you with guidance and education, as well as help you through the claims process. Knowing all the facts can help you make a smart financial decision.