Insurance was on our minds a year ago with the historic floods that came to Boulder County. With many homes a complete loss, there was no question about filing a claim with an insurer. It was simple. If you suffered a catastrophic loss, you called your agent.
But most of the time when we suffer a loss, it’s not such a clear cut decision to file. You’re probably aware that there are downsides to filing if the fault is yours or caused by nature. Every time you “use” your insurance, there’s the risk that the insurer will increase your premiums or not renew your policy.
Your first reaction may be to call your agent. But an agent’s first duty may be to the insurance company, not to you. Even if you don’t file a claim, the loss could be detailed in the insurance company’s records. It may make its way to the CLUE database, which is an industrywide resource used to determine your insurability. Here are some guidelines to help you decide when you should use your insurance.
Get to know your agent before a loss. Ask your agent if you had a potential claim, could you talk to them without the details ending up in your CLUE report even if you don’t file. “Usually if you call the insurance company directly to talk about a claim, they have a formal process to document the information,” said Brent Friesth, owner of Bolder Insurance in Louisville. “Your local agent may be different.”
You need to be able to have a frank conversation with your agent about a potential claim. Otherwise you’ll be hamstrung after suffering a loss when determining whether you should file. Also find out if they handle claims through the agent’s office or a toll-free number to the home office. Anyone can sell you an insurance policy, but a good agent should add value at claim time by wanting to be the first contact.
Make your insurance deductibles high if you can bear the potential loss. Your son runs into a street lamp and causes $1,200 of damage to the back end of your car. Do you file a claim? If you have a $250 or $500 deductible, it’s tempting to file with your insurance company. With a $1,000 deductible, you’re more likely to eat the body shop bill.
This is one of the strongest arguments for keeping your insurance deductibles as high as your finances can comfortably bear. If you have $10,000 in the bank, then covering a $1,000 collision deductible won’t be a problem. High deductibles help keep premiums down. This applies to how much you pay for insurance today, but also in terms helping limit the number of smaller claims in the future. If you don’t file for the small claim, then that information won’t appear on your CLUE report. This will help keep premiums down with your current (and future) insurer.
Be careful with small claims. With the hail, floods, and wind we have in Boulder County, it’s not uncommon to file an insurance claim. But you should think twice before doing so. While the first claim will probably not get you dropped, the second claim could be your last with your present insurance carrier. What more, because of the CLUE report other insurance companies will know about your claims history and may not offer you coverage or will only do so at high rates. That’s why many insurance experts recommend only filing significant claims with your insurance company. “There are some carriers that will not renew you after two claims in three years,” said Friesth. “But if it has anything to do with injury, then I am going to say file a claim.”
Wondering if your latest conversation with your insurance company is on your CLUE report? You can find out for free at https://personalreports.lexisnexis.com/.