Why do some people tell you to think twice before you file an insurance claim? Don’t you pay the insurance company to take care of your claims for you? You do, but there are a few more things you need to think about before you file a claim. Here’s what you should know.
Do Insurance Claims Show Up On Your Credit Report?
An insurance claim won’t show up on your credit report or affect your credit score. When insurance companies use your credit report to set your rates, they’re using your overall financial situation to predict how likely it is you will file a claim.
There is an insurance report with your claims history that insurance companies do look at and can use to score you. This is like a credit report, but it’s a separate thing.
How Long Do Claims Stay On Your Insurance History?
When you make an insurance claim, it can stay on your insurance history for up to seven years. Each insurance company sets their own cutoff, and most look back between three and five years. Some may use different timelines for different types of claims or count older claims less than newer ones.
Does Having Past Insurance Claims Affect Your Insurance Rates?
Insurance companies are tracking your claims history for a reason, so it should come as no surprise that your claims history can impact your rates. This isn’t automatic, though, so some claims may not affect your rates, while others will have a more significant impact than others. In addition, each insurance company has their own process for setting rates, so your potential rate increase may vary by the insurance company.
Insurance companies are looking at both the type and number of claims. Auto glass claims are a typical example of claims that have little to no impact on your rates because anyone can get unlucky and have a truck kick a rock into their windshield. On the other hand, something you have more control over, such as your dog biting someone, could lead to a significant increase in your insurance rates. For the number of claims, having multiple small claims that wouldn’t lead to an increase on their own can often push you into rate increase territory.
Can a Claim Lead to the Insurance Company Canceling Your Policy?
The short answer is yes, but insurance companies expect a sizeable portion of customers to file claims and only cancel policies in certain situations. These would be either very serious claims, such as those caused by your gross negligence, or having an excessive number of claims.
Should You File a Claim?
If you’re thinking about filing an insurance claim, the first question to ask yourself is whether it’s worth it. If the claim is just barely over your deductible, you probably just want to pay the entire amount out of pocket. For more significant claims, you can ask your insurance agent before talking to your insurance company. Remember that your insurance agent is independent of the insurance company and can help you estimate both what your claim is worth and any adverse consequences of filing a claim. Contact Great Lakes Insurance to get help.