When should you file an Insurance claim?

questionsBy: Joel McKinnon

One of the most common questions I get as an insurance agent is “should I file a claim.” Typically this question occurs after a potential loss has happened (hail damage to the roof, wind storm blew off the gutters etc.)   In most cases, the client is trying to determine what their next step should be – do we turn in a claim, do we call a contractor etc.

For some agents, this can be a loaded question, and one that in my opinion a lot of agents shy away from.  Personally I wish insurance agents would do a better job of advising their clients when they should, and should not turn in a claim (YES, in some cases you should not file a claim).  Let me be crystal clear on one thing, in many cases its not an issue of “is there coverage?”  Most generally we are presented with “events” and there is no question the event is / would be a covered loss.  This is more of a discussion with the client on the benefits / consequences of filing a claim.  This is not always an easy conversation to have with clients, but its our job as agents to protect and advise our clients.  To many times,  agents will defer answering the question and just “throw” their clients to the claims department.   Woman in front of burned out houseThink about it this way, insurance is there to protect you from big losses (your entire roof blows off, your house burns down etc) not for taking care of every little mishap that occurs (Wind storm blows your gutter down).  Again its not a matter of it being covered or not covered, its understanding what happens when you have a claim.  

As a consumer I 100% understand the frustrations you have as well.  Insurance is a product that you are told you have to have (by the bank, the state etc), and for most families the insurance bill is the second largest bill in the household aside from the mortgage.  Yet you are also told if you use this product your rates will go up, companies will drop you and so on.  Having an agent who will advise you on when you turn in a claim and when not to turn in a claim is vital.  

I see clients every day that have called their current agent to ask about a claim, rather than giving them an answer the agents turns in a claim to the company and next think you know the company drops them (I have seen this happen to clients who have been with other carriers for 30+ years).  You as the client then get up-set with the agent, and your view of insurance is tainted.  Where had that agent actually done his job, and advised of your options, there is a chance you may not have turned in that claim in the first place.

We live in a time when the cost of all things is on the rise.  From gas to food and yes even insurance, everything seems to be increasing in cost.  With insurance, one of the driving factors with the rising cost is the number of claims being filed, and the amounts being paid out.  Over the past several years, I think we can all agree that the number of natural disasters has increased, which has ultimately lead to more insurance claims being filed.

insurance-claim_largeSo what can you do as a homeowner to protect your insurance pricing?  What can you do to help insure your cost will not significantly go up?  What can you do to insure you wont get dropped by your insurance company?  Here are a few suggestions:

1.  Insurance companies pay attention to customers who file a lot of claims. Every time you ask them to pay a claim, they take note.  At some point you become an unprofitable customer, driving them to raise your rates – or cancel or refuse to renew your policy.  Before you file a claim call and speak to your agent.  Ask them for their opinion BEFORE they file a claim.  In today’s insurance world companies are more concerned with HOW MANY claims you have, not necessarily how much they pay out.  They look for trends.  Be sure your agent is not filing a claim every time you call to ask a question.

2.  Consider your deductible. Most homeowner policies still have a $500 deductible although the industry is shifting to $1,000 and higher (Some companies have also gone to 1% of the property value).   In my opinion homeowners claims that are less than $2,500 are not worth turning in in the long run.  A benefit to raising your deductible is that could significantly lower your annual premiums and over time could more than pay for itself.

As I said above I fully understand the frustrations that can come with insurance, but I also know there are a lot of times situations could be avoided if a dialog between you and your agent had taken place.  I will leave you with this – there is more to insurance than just a price, you spend your entire life working to pay for the the assets that you have, you should have a trusted advisor who can guide you and lead you in the right direction.  If you are not getting that service from your current agent FIRE THEM!!!

For additional information here is a great article –