To file or not to file…that is the question. At least for most Americans it is. The decision about whether to file a claim with your insurance company after an accident is rarely an easy one.
Many of us fear that this will be the claim that finally causes our insurance company to raise our rates or worse yet refuse to renew our coverage. We worry that there is some invisible line that insurance companies draw and once you cross it, you will forever be charged higher rates.
Insurance is supposed to buy us piece of mind; that if our car or home is damaged we will be able to fix it and make things right again. It’s not supposed to make us worry that if we actually need to use the services we buy, it will end up costing us more in the long run.
The most unfortunate part of this whole thing is that even though this invisible line rumor sounds ridiculous there is some truth to it. In fact there are five things that you may be doing that will lead to higher insurance rates.
Most of us spend time trying to get companies to notice us so they will send us coupons or offer us deals. If there is any company you DON’T want to notice you though, it’s your insurance company. When they take note of you, your rates are probably going to go up.
You see insurance companies make a note each and every time you file a claim. In fact they enter it into a database. If you’ve ever made an insurance claim your information is in one or both of two databases: CLUE and A-PLUS.
CLUE stands for Claim Loss Underwriting Exchange; it is the most widely used database. In fact it’s reported that 98 percent of insurance companies use CLUE reports to help determine coverage and rates.
A-PLUS is the other database used by insurance companies. It stands for Automated Property Loss Underwriting System.
Originally these databases were created to help insurance companies protect themselves against fraud. However, they have evolved to become tools the insurance industry uses to screen and research applicant’s claim histories.
Every state has laws that regulate what information insurance companies add about its consumers. But in general your name, address, policy information, any claims you have made, date of loss, the type of claim made and any amounts paid out to you. Sometimes even if you just make a phone call to your insurance agent for information it gets logged into one or both of the databases!
No insurance company will say just how many inquiries or claims that it takes to raise your rates. But it’s safe to say that there is a direct correlation between the number of claims you make and the rates you pay.
It makes sense then to not make a claim when the payout isn’t much higher than your deductible. Say you have a $1,000 deductible and you file a claim for $1150 worth of damage you need fixed on your car. After your deductible, you’ll only receive $150. You have to ask yourself if the money is worth it considering that one day down the road that claim could trigger higher premiums—especially if you file another claim in the next year or so. And it goes without saying that if your expense costs less than your deductible, then you should absolutely not file a claim so as to keep your record as clean as possible.
Seems ridiculous doesn’t it? We buy insurance to protect us from bad things, but if you use the product you bought too much you’ll end up getting black balled or paying ridiculously high premiums!
But it gets worse! Did you know owning a pet can raise your rates? Be careful before you save Fido from the pound. He may be lovable, but he’ll cost you way more than just the cost of kibble.
Dog bites make up the majority of home insurance claims. A single instance will most likely lead to higher premiums.
Insurance companies get regular updates from the Centers for Disease Control and Prevention on which dog breeds are most likely to attack based on the data. As of 2012 the breeds most likely to cost you more in premiums are the Pit Bull, Doberman Pinscher, Rottweiler, German Shepherd, Chow, Great Dane, Presa Canarios, Akita, Alaskan Malamute, and the Siberian Husky.
Now I’m not saying don’t get a dog. They are great for home protection, but before you fall in love with their cuddly face and loyal nature, get a quote from your insurance company for how much your rates will go up.
Did you know that having a trampoline on your property will raise your insurance rates? Trampolines by themselves aren’t hazardous but the clumsy and adventurous people who use them tend to be. People who own them tend to file lots of injury claims, an insurance company’s worst nightmare. To combat this insurance companies charge homeowners who have trampolines on their property higher premiums.
Trampolines are part of a bigger issue that insurance companies have with homeowners. Basically anything that can cause a slip-and-fall injury will result in higher rates. If you have piles of garbage or other hazardous materials on your property, areas that are slick or cause uneven footing are all considered to be dangerous property conditions.
Fortunately insurance companies will take leniency on homeowner’s rates if the property owner remedies the hazardous conditions. Always inform your insurance company when you remove any dangerous materials or equipment from your home, you never know you’re rates might go down!
The one claim you are going to want to file with your home insurer (due to repair costs), but may want to think twice about is if you have any water damage. This type of claim tends to bring a whole heap of trouble for the homeowner and it won’t just be from the repair costs.
Water damage to a home can end up costing you more than just a high repair bill. You may find that your coverage is suddenly dropped or significantly higher. What’s worse is that down the road when you may have trouble selling your house because buyers won’t be able to obtain insurance for the property.
This is where those CLUE and A-PLUS reports can haunt you. Damage that was caused years ago, even if it was repaired, may prevent a new buyer from being able to get insurance on your home. It may be in your best interest, especially if the damage was minor, to pay for the fix out of your own pocket and let this claim slip by.
Next time you find yourself wondering should I or shouldn’t I turn this claim into my insurance company, you may want to reconsider. Insurance companies are constantly monitoring who among their customers is using their services. The minute you become unprofitable to them, you’ll find yourself without coverage or facing higher premiums.
Good luck!
Keeping Money in Your Pocket,
Nancy Patterson
