To claim or not to claim, that is the question. It’s not exactly Shakespeare, but the question is critically important and widely misunderstood.
The bad news: Consumer awareness of claims management is not intuitive.
The good news: Managing good vs. bad claims is extremely logical when you take the time to understand the fundamentals.
Synopsis: Using your insurance to avoid major financial loss generally constitutes a “good” claim. Using your insurance to avoid a minor financial loss constitutes a “bad” claim. The delineation between major and minor financial loss is where each person must critically assess their own situation. Whether for your home, your auto, or your commercial account, claims are claims and you want to attempt to minimize their frequency to minimize claims-related premium increases. A claim will typically follow you for 3-5 years. Depending on the nature of the situation, one claim may raise your premiums a little, but a second claim within a five-year period will likely increase your premiums a lot.
To better manage your future claims situations, here are some questions to ask yourself when possible claim-time occurs:
Is it a major loss? At its core, insurance exists to protect us from “major” financial loss. The definition of a “major” financial loss depends on your stage in life and your overall financial health. Beyond your deductible, how much loss are you willing and/or able to absorb? If you claim something less than a “major” loss and then experience a true “major” loss sometime reasonably soon after, your actuarial risk profile gets significantly worse.
Are you at fault? Some events are beyond your control. Uninsured/underinsured motorist events, a theft or vandalism claim, or even an “Act of God” (i.e., weather) are examples of possible major loss. Statistically speaking, these things happen. In isolation, their effects on your premium tend to be minimal. Be sure to ask your agent to have these types of coverages incorporated into your policy before it is issued.
Does the prospective claim involve another person or another person’s property? Situations involving the health and well-being of others (and their property) are textbook examples of how liability insurance protects you from prospective “major” financial loss. If you are deemed “at fault”, you are likely to be liable for the property damage and possible personal injury you inflict upon someone else. Unless the damage is property-only and extremely minor, most individuals desire to invoke financial protection via submission of a claim to protect their pocketbook and estate. In this undesirable circumstance, remember that your choices with coverage levels will be wholly put to the test.
When it comes to protecting your current estate and future earnings from catastrophic financial risk, cutting corners on coverage and commoditizing your policy can spell trouble. A relationship-based approach to all forms of insurance affords you a trusted advisor to help you work through all manner of the unexpected. Insurance professionals at Rollo Insurance are here to help you find the right insurance carrier, with the right coverages, and to deliver personalized claims assistance when unforeseen situations inevitably occur.
Some carriers offer “claims forgiveness” options with their policies, but that doesn’t keep the claim off of your record. That simply means that the carrier will overlook that claim for a predetermined period. Such offerings typically require more premium up-front and only apply to the first claim. If you have a second claim, the full weight of both claims will typically be weighted upon your policy.
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