You buy insurance to protect your home and car from damage, but when anﷺ accident happens, is it in your best interest to file a claim? It seems like the answer should be yes but a middling maybe is a far better response. Why the ambiguity? Because filing a claim can impact your rate, even on what may seem like a small event. Keep reading to find out how claims can affect your premiums and overall coverage.

What Is an Insurance Claim?

Before we look at how they affect your rates, it's important to understand the nature of 澳洲幸运5官方开奖结果体彩网:insurance claims. Insurance is a contract between you and your insurance company that promises to cover you financially in the event of an emergency, damওage, or loss. In exchange, you promise to pay premiums at regular intervals.

Claims cover things like medical and health-related expenses, 澳洲幸运5官方开奖结果体彩网:death benefits, car crashes, and incidents related to home damage. As a policyholder, you can file a claim either on paper or electronically after you experience a loss or othe🤡r incident. For instance, if you hit someone else's car with yours. you will need to report this to your insurance company if you want it to pay to have the damage fixed. You may also be required to report the incident to your company if you were the one who was hit.

The company investigates the incident and either approves or rejects your claim. 澳洲幸运5官方开奖结果体彩网:If the claim is rejected, you will likely need to cover the damage out of your own pocket. If approved, the company issues a check for the approved amount to either you or the mechanic to cover 🌃the cost of the repair.

The Insurance Claim Game

Regardless of the scope of the incident or who was at fault, the number of insurance claims you file also has a direct impact on your rates. The greater the number of claims filed, the greater the likelihood of a rat😼e hike. File too many cla💫ims—especially in a very short amount of time—and the insurance company may not renew your policy.

If the claim is based on the damage you caused, your rates will almost surely rise. On the other hand, if you aren't at fault, your rates may or may not increase. Getting hit from behind when your car is parked or having siding blow off your house during a storm are clearly not your fault and may not result in 澳洲幸运5官方开奖结果体彩网:rate hikes, but this isn't always the case.

Mitigating circumstances, such as the number of previous claims you have filed, the number of speeding tickets you have received, the frequency of natural disasters in your area—earthquakes, hurricanes, floods—and even a low 澳洲幸运5官方开奖结果体彩网:credit rating can all cause your rates to go up, even if the l𝓀atest claim was made for damage you dওidn't cause.

The Most and Least Damaging Claims

Not all claims are created equal. Dog bites, slip-and-fall personal injury claims, water damage, and mold are red flag items to insurers. These items tend to 🉐have a negative impact on your rates and on your insurer's willingness to continue providin🦩g coverage.

Surprisingly, the much-dreaded speeding ticket may not cause a rate hike at all. Many companies forgive the first ticket. The same goes for a minor automobile accident or a small claim against your 澳洲幸运5官方开奖结果体彩网:homeowners insurance policy.

Rate Hikes

Filing a claim often results in a rate hike that could be in the 20% to 40% range. The increased rates stay in effect for years, although the size and longevity of the hike can vary widely between insurers. Some may put rate hikes into effect for about two years, while others may penalize you with higher rates for about five years. If your insurer drops your coverage, you may be forced to purchase high-risk insurance, which can come with extraordinarily expensive premiums.

To File, or Not to File?

There are no hard-and-fast rules around rate hikes. What one company forgives, another won't forget. Because any claim at all may pose a risk to your rates, 澳洲幸运5官方开奖结果体彩网:understanding your policy is the first 🐎step toward protecting your wallet. If you know your first accident is forgiven or a previously filed claim won't count against you after a certain number of years, the decision of whether or not to file a claim can be made with adva🔯nced knowledge of the impact it will or won't have on your rates.

Talking to your agent about the insurance company's policies long before you neeඣd to file a claim is also important. Some agents are obligated to report you to the company if you even discuss a potential claim and choose not to file. For this reason, you also don't want to wait until you need to file a claim to inquire about your insurer's policy regarding consultation with your agent.

Regardless of your situation, 澳洲幸运5官方开奖结果体彩网:minimizing the number of claims you file is the key to protecting your insurance rat🉐es from a substantial increase. A good rule to follow is to file a claim only in the event of catastrophic loss. If your car gets a dent on the bumper or a few shingles blow off of the roof of your house, y𒊎ou may be better off taking care of the expense on your own.

If your car is totaled in an accident or the entire 澳洲幸运5官方开奖结果体彩网:roof of your house caves in, filing a claim becomes a more economically feasible exercise. Just keep in mind that even though you have coverage and pay your premiums on time for years, your insurance company can still decline to renew your coverage wh𓆏en your policy expires.

How to Save on Your Policy

Understanding the logic behind filing a claim only in the event of a large loss also provides insight into how to save a few dollars on your insurance premiums. Because you aren't going to file a claim in the event of a minor loss, having a low 澳洲幸运5官方开奖结果体彩网:deductible on your policy makes no financial sense.

If you already plan to pay for the first $500 or $1,000 dollars worth of damage out of your own pocket, set aside that amount in an interest-bearing 澳洲幸运5官方开奖结果体彩网:savings account and raise your insurance deductible to match the number. Increasing your deductible will result in lower insurance rates, and the cash in the bank will cover your out-🦹of-pocket costs in the event of an accident.

The Bottom Line

When you pay your insurance premiums regularly and on time, it may seem like you should be able to file as many legitimate claims as you want. Unfortunately, the industry doesn't work this way. Filing too many claims or certain kinds of claims can have an adverse effect on your insurance rates or even get your policy canceled altogether after the claim has been paid.

To avoid unfair rate hikes and unpleasant financial surprises, make sure you learn the most you can about your insurer's policies and industry ൲practices long before you ever need to file a claim.