Sometimes you just have to bite the bullet.
Often times our clients will call us with what seems to be a minor insurance issue and ask if we think they should turn in a claim. It’s always up to the discretion of the client, but here are some guidelines to help you decide whether you should use your insurance policy or not.
What type of claim is it?
First of all, are we talking about a liability claim, or property damage? If it is a liability claim (meaning that someone else has a claim against you or your business), then I would be hard pressed to think of a time when it would be prudent to try to handle a claim on your own. Just because a situation looks minor on the surface, that doesn’t mean that it will remain that way. Often times, injuries can manifest months or even years after an injury occurs.
Part of your insurance contract states that you must allow your insurance company to investigate and handle insurance claims as they see fit. If they don’t know about a claim, then they can’t investigate it. Therefore if you choose to deal with a claim on your own, you’re absolving your insurance carrier from any duty they had to you.
With property insurance, your insurance carrier still has a right to know about a claim if you expect them to eventually pay it. There are instances, however, where you may not want to involve your insurance carrier. For instance, if you back your car into a wall and just damage your bumper, you may want to handle that without your insurance carrier’s involvement. I would still recommend having a qualified mechanic give you a written assessment of the damage first.
What are the benefits of not turning in an insurance claim?
When you make an insurance claim against your auto policy, your homeowner’s policy, or any other policy for that matter, that claim history will stick with you for several years. Some carriers will look back 3-5 years and will surcharge your policy based upon claim history in that time. If you are surcharged $200 for 5 years, that’s $1000. And there’s no way to tell exactly what the surcharge will be.
The bottom line is that insurance isn’t designed to handle every little inconvenience that comes along. Rather, your insurance policies are intended to save you from financial ruin when ‘the big one’ happens. The best advice of all is to pay your premiums and hope that you never need your insurance in the first place.