Is it wise to file small claims on your homeowner insurance policy?

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Friday, November 27th, 2009 Subscribe To Our Feed

When setting your deductible for your homeowner policy, you should keep
in mind that filing the smaller claims may end up hurting you down
the road. Let me explain further. Your homeowner policy is really
designed for the major catastrophy claims like hurricanes, windstorms, fires,
liability claims etc…

Although your policy will cover you for much much more, filing the smaller
claims that are slightly over your deductible may restrict you from ever
changing to a different carrier in the future. Let me explain why this is and
an example of a claim that I would not recommend filing. Lets say you have a
hose that causes a leak behind your fridge. Fortunately you catch it fairly
quickly but the cost of clean up and repair still runs around $600. You have
a five hundred deductible so you say good I’ll get back $100. This $100 over your
deductible should be paid out of your pocket so it doesn’t count against your policy.

Here is how this claim may impact you later. Although this claim in very minor
in nature, insurance companies will look at your claim frequency so if you file
one or two other claims with in a 3 year period, it most likely will cause your
policy to be set up for cancellation. When shopping for a new plan, the new carrier
will ask if you have had any claims in the past 3 years. When you state that you
have had 3, they will tell you immediately that they can’t help you. The only carrier
that will be able to write you is the State of FL carrier of last resorts. You will
pay a substantially higher rate as a result.

Note that just having the one water claim where a $100 was paid could restrict you
from shopping to another carrier so you definitely want to try to minimize your claim
activity as much of posible. So if you have a minor claim, obtain estimates before
you contact the insurance carrier. If the cost of repairs is slightly over your
deductible, then I would not recommend filing that claim. Some insurance carriers will
even count the claim against you if you call them with a potential claim that you end
up taking care of yourself.

So because of the reasons mentioned above, you should try to set your deductible to at
least a $1000 and preferably $2500. This will help keep you out of trouble with filing
the smaller claims plus it will save you money on your insurance premiums.

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