When to file a claim?
Insurance can seem pretty straightforward. Damage is done, or you are in an accident, and you report a claim. While it is true that in many instances reporting a claim can help minimize your financial exposure, the fact is that often times it is beneficial to keep the insurance company out of it altogether. A knowledgeable broker can help you make these determinations, but a little bit of knowledge can go a long way. The question is, when is it wise to file a claim?
1. Why would I not file a claim?
Insurance is always there for your protection. However, making multiple claims in a policy period can make you appear unnecessarily risky. While many companies advertise "accident forgiveness," a good rule of thumb is that two at-fault accidents in a policy period all but guarantees a rate increase. If you can avoid filing a claim, it is always best to do so. Of course, the circumstances of some accidents make filing a claim inevitable. The trick is being able to tell the difference.
2. When should I avoid filing a claim?
Generally, the claim process can fall in to two categories. In a multi-person accident, it will likely be out of any one individual's hands as to whether or not file a claim. If no other people are involved, however, filing a claim can be often be done at your discretion. Generally, if damage is minimal, it makes more sense to pay for it out-of-pocket as the cost to you will be less in the long run than your rate increase. Similarly, if the cost of the damage is similar to your deductible, it also makes sense to pay out-of-pocket. There is no law requiring you to contact your insurance company in the event of the accident, and paying a little bit more money right now could save you a lot more money later.
3. When should I file a claim?
A claim should be filed any time there is an accident with significant damage, or in an accident that is not your fault. Although it can sometimes be difficult to determine who is at-fault in an accident, the insurance company will walk you through the process. Even in an accident with multiple people, it sometimes makes sense to avoid contacting the insurance company if the damage is minimal and those involved are not blinded by road rage.
The entire claims process, like many aspects of the insurance industry, can be a bit of a maze. For this reason, it makes sense to get in touch with a local, independent broker. By virtue of their independence, brokers are able to assess their clients' insurance needs on a case-by-case basis and can provide unbiased advice in the event of an accident.