To Claim or Not to Claim? ... That is the Question

Those who work in the insurance industry hear this question all the time:

    * Should I submit a claim to my insurance company?

Of course, the primary concern of most consumers when reporting a loss is that the insurer will raise their rate or cancel their policy.  Honestly, there is no 100 percent guarantee your rates will stay the same or your policy will not be cancelled. Each carrier deals with these situations a little differently.  Some insurers will cancel policyholders if they believe they are too much of a risk. So, if you have filed multiple claims, had numerous traffic violations, etc., then it is possible a carrier may raise your rates or cancel your policy.

Think of it this way: insurance companies -- while in the business to cover policyholders for their losses -- are also in business to make a profit. If they pay out more money in claims than they collect in premiums, then they may lose money. When insurers do increase rates, consider that the rates that were increased for risky policyholders help to keeps rates lower for safer policyholders.   

But in the vast majority of situations, we strongly encourage policyolders to report losses to their insurer. Why? There are two very good reasons why losses should be reported:

1) That's why you pay insurance premiums. Plain and simple. If you have health insurance that covers prescriptions, you will take advantage of that, won't you? No one wants to pay full price for their medicine. It's expensive! Well, so are car accidents. Since you have paid for the insurance coverage, you might as well use it.

2) Your insurance policy stipulates that the carrier will defend you in the event of a claim. Anyone who has ever been involved in an accident, has been sued by the other party, and has been represented by their insurer in the lawsuit, will no doubt concur that this is a major benefit of maintaining insurance coverage.

The bottom line -- to answer the question -- YES! you should report your claim to your insurance company.