To File or Not To File an Insurance Claim
Smart property owners understand the benefits of having an insurance policy to pay for major repairs, following covered perils. Fire, water, and theft are just some of the issues that result in losses covered by your plan. If you experience major damage or losses to your place in North St. Paul, MN, it probably seems like a no-brainer to file a claim. That’s the point of carrying coverage, right? Well, you may want to step back. it really depends on your particular situation.
Filing an insurance claim may negatively impact your premiums, but the answer is not so cut and dried. Here’s what you should know.
Understanding an Insurance Claim
You pay a premium annually, semiannually, or monthly to your insurer in exchange for coverage of losses due to major events, such as water damage. While policy details vary between insurers and the insured, you’d file a claim for the following:
- Repair, restoration, and reconstruction of the building structure
- Repair and replacement of damaged or lost items
- Medical and healthcare costs for injured persons
- Death benefits
- Other benefits such as temporary housing
Typically, an investigation is conducted by your insurance company to determine the cause, the extent of damage, and to confirm that it is covered by your plan.
Exploring a Claim
No two claims are equal, and that’s primarily because there are other factors that your insurer factors when investigating a claim. These factors may cause your premiums to go up after filing. Some common factors include these:
- Type of claim
- Number of previous claims filed
- Frequency of events that result in losses, such as weather events and the likelihood of a business or home flood
- Credit rating
Some insurers view certain types of claims as problematic. Slip-and-fall personal injury, water damage, mold, and dog bites are examples of claims that may result in a premium increase. Some claims may cause your insurer to discontinue coverage, requiring you to purchase a high-risk policy with higher premiums and lower coverage limits.
Answering the Question
Should you file or not? That still remains to be seen. Because filing multiple claims can cause your rates to increase, your best move may be to file only when you’ve experienced a catastrophic loss. For example, if a wind storm takes off a few shingles, it might be better to pay for this out of pocket. Whether the damage is significant or not, It’s important to have a clear idea of what your existing policy covers well in advance of a problem. Keep in mind that your agent or representative may be obligated to notify your insurer of a potential claim.
Responsible ownership means having coverage to protect your property in the event of a loss or other damage. You’ve contracted with an insurer to pay premiums regularly for this coverage. Filing an insurance claim may cause your premiums to increase, especially if you’ve submitted multiple claims in the past.
It’s up to your insurance company to decide on a rate hike or to drop coverage altogether.