Should I file a Claim?

It seems simple enough: You purchase property insurance, and it would naturally follow that any time there’s damage or loss of your insured property, you file a claim. But years of experience have taught us that it’s not always so straightforward, and those who file too often or for too much may find their policies being cancelled by their insurance company.

One claim every ten years on a homeowner’s policy, for instance, is the norm in the industry. Claim activity above and beyond that norm signals a red flag to underwriters who then take a closer look at your policy and whether or not they want to keep you protected. It makes sense for the insurance companies who are looking to save the most money to keep only those insured who file the least amount of claims, but this notion butts up against the idea from consumers that they should be covered for any of their claims during any year that they pay for their insurance.

So what’s a homeowner to do?

The sad fact of the matter is that this disconnect between underwriters and homeowners will continue to drive homeowners towards never claiming the ‘small stuff’ until there are more protections for homeowners, insuring that they continue to be...well, insured! Before you start feeling disheartened, see if some of these tips can be incorporated into your life and your policy to help make things a little easier:

• Take the Biggest Deductible You Can Afford: Insurance companies offer a wide range of deductibles, but if you’re paying for a lot of the ‘small stuff’ yourself, then try to take the largest deductible you can afford (around $5,000 is a good goal). In this way, you can pay for the smaller items yourself and reserve your insurance for big ticket items.
• Rethink Your Insurance: We’re not saying that you shouldn’t have insurance, because that’s simply not the answer. When we say ‘rethink your insurance’, we mean rethink what your insurance is for. Instead of thinking that your insurance is meant to cover all claims, think of your insurance as though it’s your protection in the case of major losses. Pocket your savings from having a higher deductible policy, and reserve insurance for those big losses.
• Proactively Prevent Small Losses: Since you’re restructuring your insurance to tend to major losses and planning to cover small losses yourself, then it behooves you to proactively prevent the small stuff from happening. Repair and replace your smaller losses before they spiral into a larger problem.

At the end of the day, whether or not you file a claim should rest on a few different variables - the biggest of which should be the amount of the claim you plan to file for. Save for small losses and file only for the larger ones to help prevent you from losing your homeowner’s insurance altogether.