NOW What?

NOW What?

How many times, since you first became “intimately involved” within the insurance industry, have you been asked that most obvious question, “When should I file a claim?” I can tell you this: that from being in this thing of ours for many, many years, I would venture to guess that it is something that occurs within your office, or almost anytime that you discuss your livelihood with a non-insurance professional, that this question arises and is posed to you.

Well, the interesting “thing” about this question, is that if you ask fifteen different insurance agents the exact same question, there is an excellent opportunity that you may come away with sixteen different answers, as the “four out of five doctors recommend” scenario certainly does not apply here!

Now considering the fact that most insurance carrier contracts are closely related in language and coverage, albeit they all have their own little nuances, most policies adhere to the premise that “everything is covered unless excluded”. So therefore you would assume that the answer from most agents would be virtually the same… well not in our business!

A little perplexed by this, I decided to do a little fact finding and half-baked research on my own, and being that I closely associate myself with so many folks within this industry, I called upon some friends of mine and conducted a very simple, one question survey, “When do you recommend that someone file a claim?”

Understandably so, the most common answer that I immediately received was, “What kind of claim are we talking about?” After I then provided the same response to that question to every agent who asked me, I discovered that (and surprisingly so) although the answers from most insurance professionals were closely related, there were many difference of opinions on this question, as they ranged from, “Every time” to “Almost never”. However, there was one common denominator that I quickly determined had a huge impact on which answer I would receive. This item, which is typically related to the real estate market, certainly reared its head and in this instance pertained to our insurance industry vs. the real estate market: “location, location, location!”

For instance, if we are talking about a homeowners claim in a coastal region of the country, agents writing business in those areas highly recommended that you do not file a claim unless absolutely you would most likely receive necessary…or run the risk on being non-renewed. Ask this question in Bismarck ND, and you are likely going to get a more lenient response from the agent. Same holds true of a minor repair that you may be in need of after your vehicle was hit while parked at a shopping mall in a densely populated area such as New York City or certain cities in New Jersey, and chances are the agent would suggest that you “eat it” versus running the risk of a surcharge increase on top of an already extremely high premium because of the territory.

So to try and find some common ground, I asked a friend of mine, Charlie Schein of Star Schein Insurance Agency in Glastonbury, CT, to please jot down his answers to this quest, along with some other “tips” that he offers his clients. The following is what Charlie suggests:

Do #1

Document the damage

If a tree falls through your roof, your bathtub crashes through the ceiling and into your living room, or the evil telephone pole on the street mysteriously crashes into your car—take your smartphone out and start taking pictures.

Even though the insurance adjuster will have their own camera, it never hurts to have your record of what happened. Additionally, your pictures will be the first ones from the scene. This is especially important for an auto accident. Take pictures of both cars, and the weather and road conditions. If anyone has been injured, first call 911. Then start taking pictures.

Do #2

Know when to call your car insurance agent

Are people hurt? Are other people or cars involved? If the answer to either of these questions is ‘Yes’—call your insurance company claims office only after you call 911.

And never, never, ever admit fault at an accident scene. When you purchase an auto policy, you are agreeing that the insurance company may settle claims as they see fit on your behalf. Admitting fault at an auto accident scene might invalidate your policy (depending on the company or how the policy is written—each company is different).

On the other hand, if you hit a metal pole in a parking lot and dented your car (doing no damage to the pole) and it will cost $1000 to fix the dent and you have a $500 collision deductible, you may want to have a chat with your independent agent (not the company) before filing a claim.

Do #3

Raise your deductibles—all of them

If you haven’t heard it before, let me tell you now: your insurance policy (auto or home) is not a “repair” policy. It is designed to be used in the event of a catastrophic event. Raise your homeowner’s deductible to $1000 or $2500. Increase your comprehensive and collision deductibles to at least $500. This has the added benefit of lowering your premiums (in most cases).

Do #4

Shop around

Let’s say you do have a claim or two, and you are getting surcharged. Insurance rates vary from carrier to carrier, and it can’t hurt for you to either ask your independent agent to shop around on your behalf.

Do #5

Make sure your claim gets paid

If the adjuster comes back with a claim settlement offer and you disagree, ask your agent for assistance. They may be able to offer some advice for a better settlement. In extreme cases (either a large or a total home loss) you might have to contact a public adjuster. They deal directly with the insurance company to obtain the best settlement possible the settlement.

DON’TS

Don’t #1

Forget to mitigate the loss

If a tree has fallen through the roof, cover the furniture you can’t move, put a tarp over the hole, and/or call a disaster recovery service. These folks can make sure a bad event doesn’t get worse. In some cases they can even provide with an estimate of what it will take to get you back to where you were before the loss.

Don’t #2

Have low deductibles

The higher the deductible the less likely you are to file a small claim. Also, your premiums will (typically) be lower. Talk to your insurance agent about which deductibles they recommend.

Don’t #3

File small claims

Insurance companies are obligated to pay claims, but they are not obligated to keep you as an insured. When a policy renewal comes up, an underwriter looks at the frequency of claims over the past 3-5 years. The more claims within that time frame, the less attractive the policy. Your insurance policy is there for catastrophic loss—not small home repair.

Don’t #4

Inflate your loss

When your car or home gets robbed, do not “lose” your brand new 85-inch LED TV. In addition to claim frequency, companies also look at the amounts paid out. Insurance is there to bring you back to where you were before the loss. It is not supposed to be a money-making proposition.

Don’t #5

Neglect getting an alarm system

This preventative measure is worth money to you in the form of discounts. A central station alarm in your home can be a 20% credit. The same goes with a passive alarm/disabling system in your car. Each company varies by the amount of credit, so check with your agent to see what your company offers.

Summary

Not every loss should result in a claim because it could easily cost you more in the long run with higher insurance premiums. Other times, it will save you money and get you back to where you were before the damage happened. Talk to your (independent) agent for advice on how to treat the problem you’re in before you call the company that insures you.

In the meantime, keep your deductibles high in case of damage to your property, and be prepared to document auto accidents and valuable articles in your home to make sure you get the correct settlement in the event of loss. Check with your agent about available credits your company offers for alarm credits on both cars and homes, and start saving money now in case you find yourself in a position where filing a claim is worth it—even if your premiums go up because of that insurance claim.

Thank you, Charlie, for sharing your suggestions with us. I would like very much to hear from some of our other readers of this column, to see what your suggestions may be as well, and I will write a follow up column to this one.

Well, according to our calendar spring has sprung…although as I look out my office window, I can still see traces of snow in my backyard, while a cold rain falls through the forty degree chilled air. I have never professed within this column or on the streets of Long Island to be anything close to a meteorologist, but I have this strange suspicion that it should be much warmer here in the Northeast!

However, I can easily predict with a great deal of certainty, that spring brings with it convention season within the insurance industry, and next time we meet we will be chatting about Buffalo I Day, along with a few other events that come along with what is supposed to be “the warm weather”!

So until then, continue to keep the fireplace burning and Ciao for now!