Claims Advice

To File or Not To File.  That is your Claims Question!


CAR ACCIDENTS  ( in particular)

Unusual car accident - zoomed in / Foter / CC BY-NC-SA

One of my pet peeves in the industry and I admit I have many is when a customer experiences an event and doesn’t consult with an agent BEFORE filing a claim.  Or vice versa . . . an agent who doesn’t speak about a possible claim BEFORE the insured officially files a claim.  Either way it can be bad for both parties.

In several ways an unnecessarily filed claim can impale the customer.

First.   Driving record, driving record, driving record.  Once the claim is filed it goes into a central information system used by all insurance companies in any state.  So whether police authorities were called to the scene or NOT the claim will still be there for all to see.   It either shows on the  motor vehicle record or on the LIS report.  It may not be a big deal to have one show up on your record if you are already a good driver with a clean record; however, if you drive for a living, already have violations and/or accidents, or if you want to keep insurance shopping options for your future in the next 3-5 years, then you better not file claims frivolously.

Second.  Filing a claim could affect the rate with your existing company.  If you do not have accident forgiveness (some companies have you earn accident forgiveness based on how long you have been with them and other companies sell accident forgiveness in a package or plan) you should consider these thoughts first before turning in the claim:

A)     How much will my rate go up if I file this claim now?  And for how long?

For example:  If you are fairly new to the insurance company you have currently then your claim could hurt you in losing your good driver discount AND also receiving an accident surcharge.  If you pay $300 every six months in premium now; but, your good driving discount is $140 in savings.  Then add on top of your low premium an accident surcharge of $130 every six months for 3 years. . . your premium of $300 + $140 + $130 = $570 for the next 3 years at least maybe longer.  That means your cost for car insurance would be $540 more a year than before times 3 years = $1,620.00 more than what you pay now.

If your damage was only $650 after your $500 deductible was met then you would be losing more money to file the claim than to pay out of pocket.

B)    If you have accident forgiveness but it is only for the first accident then you may want to not “waste” the accident forgiveness on the small claims.

Sometimes it is better to have a threshold limit in mind when determining whether to file a claim or not.

Slow Down You Move to Fast
jfravel / Foter / CC BY-NC-SA

C)     Claim frequency is also another rating factor.  With most companies even if none of the accidents were your fault, but you had 4 claims within 2 and ½ years you can normally expect your preferred rate to go bye bye and you will receive a non-renewal letter or be put into an enormously expensive rate.

Third.  Headaches are another reason to consider filing or not filing a claim.  You may not want to file the claim because your buddy Joe down the street can pop the dent out for nothing.  (I’ll e talking about that option in great detail in another article.)  Or . . . you may want to file the claim to not have a headache from scrambling around on your own, paying out of pocket, getting some sort of satisfaction without hollering at a claims rep.

Kay Kim(김기웅) / Foter / CC BY

Unfortunately the trend in training some claims representatives with some of the big name insurance companies is to inform the new claims reps to discourage all calls that are from the third parties (not their own customers or insureds) from filing the claim through the at-fault parties company.  If you were shopping at the mall and as you walked out to your vehicle you saw a person hit your car and they were insured with Geico naturally you should call Geico and file the claim through their customers policy.  But . . . Geico’s representative could tell you that it is better to just file the claim through your own company, or call your own agent to file the claim, or my favorite is . . . “this is a ‘no-fault’ state so each person uses their own policy . . . FALSE!!!!  When you get a runaround from the at-fault parties’ company you may prefer to just let your own company handle it for you.  I can certainly understand that.

Another headache to avoid is when you are at fault and there may be the slightest hint of the other person being injured or milking the accident for their benefit, then it may be better to turn it in as a claim.  I actually believe without fail if there is any kind of injury at all you should always file the claim and just forget all the above stuff I said about rate problems or driving records considerations because claim related injuries are not anything you want to mess with – especially without good legal representation.

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