If you’re looking to save money in the near term on your auto or home insurance, it’s worth looking at everything when it comes to your policies–everything including how you think about smaller claims.
Along with their customers, insurance companies are facing record-high inflation and are having to take “collectively unprecedented, drastic actions” to restore their profitability, explained Rockville Centre Insurance Agent, Alex Anderson.
And that includes taking a hard look at your frequency of claims, or how often you submit them. More specifically, smaller claims.
Insurance companies are now paying significantly more for the same claims filed just a few years ago, but rates, however, have not been adjusted to account for the 40-year high of inflation.
“Currently, all companies are struggling to remain financially stable and they’re looking at every line right now,” Anderson said. “Some companies are actually struggling to stay solvent. Many have even gone out of business or pulled out of geographic areas completely.”
And when insurance companies are struggling, they must evaluate both new policies being offered and also which policies to renew — and the more often claims are made makes you a ‘riskier’ renewal for the company.
“The concern here is twofold,” Anderson said. “First, to be mindful of the impact of submitting frequent and smaller claims to your current companies. Second, to preserve your own insurability if you choose to (or have to) shop around.
Anderson’s advice for policyholders? Consider whether or not a small claim on your home or auto policy is absolutely necessary because it could be the difference between having a renewed policy or being put in a tight spot.
“Insurance companies use a variety of factors to qualify a prospective customer to offer an insurance policy and to determine the price of that offer. It used to be that I was able to take a client who had multiple claims, whether it be on the home or auto. One, two, even up to four claims/tickets/violations in three to five years,” Anderson explained. “Now, that has completely changed. Some carriers may not even offer coverage to a prospective client who has even one claim, regardless of fault, in three years.”
“That’s why I have insurance!” you may say. Anderson notes that while policyholders are absolutely entitled to submit a claim for anything that is covered under their policies, they should know it’s more about the current environment that insurance companies are in, and as a consumer, protecting your future wallet.
“It really is an unprecedented time for the industry, and while no one is likely to shed a tear for an insurance company, as consumers we should consider all options in order to protect ourselves as well as our current and future wallets,” Anderson said. “Be careful when thinking about putting in smaller claims such as those $500, $1,000, or maybe even more if you can financially handle it. You will be glad you kept your record as clean as possible.”
More advice from Alex Anderson
Why New York auto and home insurance rates are rising so much in 2023