If you’re a homeowner, the question of “to claim or not to claim” has likely gone through your head. When unexpected problems arise, it can be difficult to know whether making a claim is really worth it.
As insurance brokers, it’s our job to help our clients navigate this question. While the point of having an insurance policy is to be protected in case of a loss, not all losses are considered equal. In fact, some losses may not be worthwhile for you to submit – especially if the claim could impact your coverage or lead to you paying more down the road.
Before delving into the specifics, here’s 5 things you need to know about claims:
- For small losses, you’re already paying a significant part of your claim through the deductible.
- If you make a claim, your deductible may increase.
- Submitting a claim against a property policy could cause you to lose your claims-free discount – if applicable – at renewal. Depending on the policy, this seemingly small difference could mean hundreds of dollars.
- When it comes to claims or accident forgiveness, small claims are treated the same as large claims. This means that a claim worth $800 is treated the same as one worth $100,000. This could have a substantial impact on your next claim.
- Frequently submitting claims can result in changes to the terms of the policy. For example, coverage restrictions could be applied at renewal time.
Now that you’re familiar with the basics of claims, we can get into the specifics.
The purpose of purchasing an insurance policy is to protect yourself from the unexpected and to provide yourself with a sense of security. Therefore, the last thing that you should be worried about is your insurance policy and whether or not you should make a claim. If you find yourself questioning it, here are 3 questions to ask yourself:
Is the damage worth more than my deductible?
A deductible is the amount of money listed on your insurance policy that you will have to pay out of pocket before your insurer will pay the remaining claim balance – up to the limit of your policy. If the damage will cost less to repair than the amount of your deductible, you will not receive a payout if you make a claim. In situations like this, we recommend not making a claim and instead paying out of pocket. For example, if your deductible is $1,000 and you’re debating making a claim for $600 worth of minor water damage, you will not receive a payout. However, if the water damage was $8,000 and your deductible is $1,000, then submitting a claim makes sense. Unexpected, costly expenses like this are exactly why insurance exists.
Is the damaged space or item covered by my policy?
Not everything can be covered in an insurance policy. Plus, there’s many things that you may have chosen not to insure. If the damaged item isn’t covered, you will not be able to make a claim. Instead, you will have to repair it yourself. Although many of your belongings are likely covered, some may not be. For example, if your insurance policy excludes electronics due to accidental breakage, you will not be able to make a claim if you smash your laptop.
Was the damage a result of an event included in my policy?
This one is very straightforward. If the event that caused damage is not clearly outlined in your policy, then you will not be able to make a claim. For example, if your home insurance policy does not cover damage caused by bird damage, you will not be able to make a claim if a family of birds transforms your attic into a nest.
Ultimately, if unexpected damage occurs – don’t panic! If you find yourself debating “to claim or not to claim,” give our team of experienced insurance brokers a call. We will help you navigate the claims process.