Things You Should Know BEFORE You Submit Your Claim

You’re probably reading this because you recently had a car accident or suffered some other kind of loss to one of your vehicles, your home or your business.

And you’re wondering …

• Something bad has just happened; what do I do now?
• Should I submit a claim to my insurance company or not?
• Will there be any negative consequences?
• Will my price go up? By how much?
• Can my policy be canceled … and what happens then?

These questions are critical to you.  And while your situation is different from the guy who hit your car or from your neighbor next door, we’d like to offer you some inside information to help guide you to your answers.  

But, before we discuss whether a claim should be made under your policy, let's quickly discuss what you should do with basic property or car insurance claims that are obviously large enough to be turned in to your insurance company. 

Damage to Your Property:

If your home or business property sustains any damage, it's always best to call in the claim at the outset but only after (or while) you have done what you need to do to secure your property from further damage, if this is at all possible.  If your pipes have burst, for example, you need to call a plumbing company ASAP to stop the flow of water.

Then, call your insurance company to report the damages and work with the claims service representatives to get - in this example - a water remediation company to remove as much water and dampness from your property as you can.  If you can't reach the insurance company, the names and contact information for local and national companies that regularly work with insurance carriers to secure and repair properties are available on the internet.  Just type in words such as "water remediation" or "insurance repairs". 

Damage to Your Car 

Let's quickly dispense with the obvious:  If there are ANY injuries incurred in an accident - you are hurt, they are hurt, or there is even just the possibility of an injury - you must call that claim in immediately.  Keep your insurance ID cards handy in your glove compartment; your policy and claims telephone numbers are on them.

Here is what you should do to protect yourself following an accident.  Let's take one of the more common claims, a rear-end collision.   After you determine that it is possible to safely pull to the side of the road, do so; if it's not safe, call the police from your cell phone.  

Then, please follow these steps.  You may even wish to print this out or call our agency for a glove-compartment claims kit:

• If you don't trust the other person but don't feel threatened by them, ask for the person's license, place it in your pocket, and then suggest moving to the side of the road.  They likely won't leave the scene that way.
• If it is a bad accident, call 911 immediately
• Do not admit to liability at this time.
  
• Use your camera or your cell phone to start taking pictures of the damages to your car as well as one or two shots of the other person's vehicle.
  
• If you see other damage to his vehicle that appears not to be related to this accident, take a picture of that, too.
  
• Photo the other person's vehicle license plate.
• Take down all the information on the other person.  The basics are the Name &  Address of the driver and that person's contact information; the Name and Address of the vehicle owner (often, these are different); the Insurance Company & Policy Number; and any Contact Information for other people involved in the accident - or as many as you can - with the obvious emphasis on the driver of the other car(s).
  
• The name and contact information of any witnesses
  
• If you can, note the area where you were hit (cross streets, directions - northbound on Elm, for instance)

Beyond that, the adjusters will develop the additional information needed to assist you in the development of the accident information.    

Then there is the damage to your car and what do about it.  While you have the complete freedom of choice to have your car repaired at any repair shop you choose, if you use a shop approved by your insurance company, typically the process will move much faster.  Again, you have the choice - no one can make you get your car repaired at a specific place; you have complete control in that process. 

There will be an initial estimate, but generally the claim will be larger than the initial estimate because some damage simply cannot be determined until the car is dismantled and they look inside at all the damage.  Sort of like a surgery: The doctors have a good idea what's  happening inside you, but until they open you up and take a look, they won't know for sure.  But, don't worry; the insurance company will pay for all damages for which it is liable.

Which brings us to another phase of the claims process:  What if the insurance company (yours or theirs) wants to "total" your car, as the repair damages exceed the market value of the car?  With newer cars, this is generally not an issue. But, if you have pristine but older car, this will become a concern - and rather quickly.

The insurance company has all the right in the world to not pay for repairs that exceed the value of your car.  None of us likes that, especially when we are hurt by someone else.  Even so, you would want the same deal if you were personally fixing a car you damage; you, too, wouldn't want to pay more for the repairs than the car is worth.

Still, you can protect yourself from being low-balled.  And, you need to; not that the insurance company is looking to hammer you with an offer, but they simply will not have all the knowledge about the car that you do. Here is how you do it:

• Initially, you want to go to the Kelley Blue Book website (www.kbb.com) or Edmunds (www.edmunds.com) to determine the value of your car.  You probably do this when shopping for a pre-owned car.  And doing it after an accident, where you believe your car may be totaled, is just as valuable; you are determining, with your knowledge, the true value of your car.
• Go to dealer websites and other sites, like Auto Trader, to see what similar make & model cars with similar characteristics (mileage, options) are selling for.
  
• Check the newspapers - the auto classifieds - for sample pricing.
  
• And, if you are so inclined, go out and get your own initial estimates; this is not for the faint of heart, as it will be a fair amount of time invested.  
• Then, when the adjusters make you an offer on your car, you have the information to either get more money for the car or, hopefully, there will be enough information on the value of your car to let the adjusters change their decision and actually fix your car!  
• If you need additional assistance - you just can't get the adjuster to budge, call us; we'll review your situation and let you know if we can help. If we believe we have a shot to get you a bit more on your settlement, we'll certainly discuss it with the adjuster.    

Small Claims:          

Okay.  What if the claim is small, absolutely no one was injured and there is no possibility of there having been an injury, and you aren't sure what to do - to you turn it in or not?  Below, please follow the inside information to help guide you to your answers.  Still, admittedly, you won't get a specific answer to your specific situation in this report.

Why not? Two reasons:

First, there are many factors that determine the true impact of a claim on your policy. For instance …

• Each kind of insurance is subject to specific state laws and regulations – especially involving cancellation,
• Each insurance company has its own internal rules and practices,
• And your personal claims history and circumstances will trigger those rules and practices differently than, say, your neighbor’s.

Second, once you have the facts and know what the impact will be, the decision to submit the claim or not is truly personal. What’s right for your neighbor isn’t necessarily right for you. Given the same facts you each might make a different decision.

The bottom line is this …

If you’re concerned about the potential impact of submitting your claim, contact us and discuss your situation! (This is just one of the many benefits of doing business with me and my dedicated team instead of some faceless 800 number somewhere.)

We’re here to advise and counsel you … to explain how your insurance really works. We’ll give you the facts BEFORE you submit your claim and help you make the best decision – for you.

Now … here are the more important factors that come into play. But first …

Isn’t This What My Insurance Is For?

Yes … insurance is for paying claims.

You elect the protection options and limits you want; you pay your premium; and your insurance company pays your covered claims.  That’s the deal you signed up for.

"Then why all this talk about the consequences of claims? Why can claims increase my price or even get my policy canceled? That’s what insurance is for!"

That’s absolutely true. Yet, it's simply not the entire story.

I don’t want to turn this report into an insurance manual - there isn't enough space on these pages, and you don’t want that either! But this is a common question I get from clients, so I want to explain it to you here … very simply.

Insurance, and the price you pay for it, is based on risk – the risk of a loss occurring.  High risk of loss means higher prices are necessary to pay for those increased losses. And low risk of loss means lower prices.  Make sense?

What determines the level of risk? Lots of statistical factors affect insurance risk and pricing. But claims experience is one of the most important.  Statistics show that people who have a claim are more likely to have another claim. So, when compared to someone with no past claims, someone with claims on their record represents a higher risk of loss to the insurance company.

And you already know what a higher risk of loss means:  higher prices.

Therefore, when you have a claim you now represent higher risk of future loss to your insurance company. And sometimes that increase in risk will be met with an increase in price.

This allows the company to keep prices lower for people who represent lower risk.

The Size of Your Loss

If it’s not already obvious - even presumed, this discussion about whether or not to submit your claim really only happens when you sustain a small loss … a loss that often barely exceeds your deductible.

Clearly, if you have a $20,000 car wreck…or $50,000 of damage to your home…or $35,000 of inventory stolen from your store, it’s highly unlikely that you would even consider not submitting that claim. That IS what you buy insurance for!

On the other hand, small losses can sometimes hurt worse by submitting them. The consequences of submitting the claim may outweigh the money you receive from the company.

Sometimes it just makes sense to pay your loss yourself and avoid the consequences of submitting a claim.

Your Deductible

Your deductible has a direct impact on whether you should submit your claim or not.

As a quick review, your deductible is the amount you pay out-of-pocket toward the amount of your loss. The insurance company then pays the balance.

For example, let’s say you suffer $3,000 of damage to your home under a covered claim. And let’s say your deductible is $1,000. In this case you pay $1,000, and your insurance company pays the remaining $2,000.

Clearly, if the amount of your loss is less than your deductible there’s no point to submitting your claim. You’re going to pay it all anyway, so why report it?For example, if your deductible is $1,000 and your suffer $800 in damages, then your insurance company isn’t going to pay anything. The amount of damage is less than your deductible. You’re responsible for the first $1,000, so you’re responsible for the full $800 in this case.

But here’s where it gets a little tricky.

What if the loss is just a little bit more than your deductible? What if your deductible is $1,000 and the damage is, say, $1,200?  In this case, your damages are only $200 more than your deductible. Therefore, you’ll receive only $200 from the company. Is it worth getting $200 to suffer the consequences of submitting the claim?  It depends. 

It depends on what those consequences are!

Depending on the type of loss and your personal situation, this claim may cause an increase in your rates, possibly a significant increase. It may cause your policy to be non-renewed.  You may find – once you know the exact situation for your personal circumstances – that it’s less costly for you to pay the additional $200 out-of-pocket and keep the claim off your policy.

The point is … unless you know what the impact will truly be you can’t make a good decision. So, if you’re not sure, get the facts.

Did Someone Get Hurt?

Many incidents involve only property damage. For example, strong winds may blow shingles off your roof. Or perhaps you backed into a pole in a parking lot. 

No one is hurt, and there are no injuries. It makes the discussion a simple one. When your loss involves small property damage only, it may be sensible to take care of it yourself and avoid the consequences that come with submitting the claim. You pay for the damage and it’s over.

However, when someone’s injured it’s never a good idea to keep that to yourself.

Why? Because no matter how minor the injury may be, the injured party can come back and sue you many months or even years later.  If that happens and you didn’t report the claim when it occurred, your insurance company can legally refuse to defend you in the lawsuit and deny any payment, as well.

Your policy requires you to report your claims promptly so the company can control the claim. If you don’t, they can deny coverage.

In the case of a small property loss, nobody’s ever going to come back and sue you. But when someone’s injured you never know. Defending yourself in court is expensive – even if you win – so don’t take a risk when someone’s injured. Always report those claims.  And, if by chance you also have PrePaid Legal insurance, there are situations where a claim may not be covered, even though you have hundreds of hours built up.   You don't want to mess with any bodily injury claim, no matter how small.

Company Rules and Practices

Regardless of what TV commercials try to tell you, every insurance company is different. They all have their own rules, practices and rate plans.  And they all treat claims differently, too, with some of the biggest as most well known companies being the worst offenders. 

Real life example:  Some companies pay to put your car back to the manufacturer's original specs and to use the manufacturer's approved repair techniques & parts - such as proper methods for straightening out your unibody vehicle following an accident, and some may use cheaper methods to repair your car.  Your car may look the same, but it won't drive the same or potentially could have safety issues.  Certainly, there will be - at the very least - resale issues.

Some companies have a price for just about everybody. That means that no matter how bad your claims record gets they’ll keep you insured. Of course, your price will go up and up to match your claims experience!

On the other hand, some companies don’t have a price for everyone. When your claims record gets too bad, they’ll non-renew your policy (within the circumstances allowed by law). When that happens you’ll be forced to get insurance elsewhere, and it’s likely you’ll pay a significantly higher price with a new company.

State Laws

State insurance laws protect you, the consumer. Among other topics, those laws define the circumstances under which a policy can be canceled or non-renewed. Depending on the type of insurance, these laws can provide you a lot of protection or very little.

For example, personal auto insurance is generally well protected under the law. An insurance company can’t cancel or non-renew a policy simply because they don’t want to insure you any longer. The law states the conditions under which cancellation is allowed.

However, other lines of insurance – like business insurance, for example – have fewer such defined cancellation criteria. In many cases, the insurance company can non-renew your policy just because they don’t want to keep your risk on their books.

I can’t emphasize this enough … there are no clear-cut guidelines for making this decision. State laws, company rules and practices, the size of your loss, your deductible and your personal claims history and experience all mix together to create your unique circumstances.

If you’re wondering whether or not it makes any sense to submit your claim, give me and my team a call FIRST. Get the facts for your specific situation. And then make an informed decision.