This is a question we get asked a lot by our clients in Burlington and the surrounding area. There are some criteria we use to determine if opening a claim is financially beneficial.
Things to consider when deciding if opening a claim is "worth it" -
- Do you have a "free accident", or similar perk on your home policy?
- Do you have a claims free discount? If you have a free accident and are getting a claims free discount, opening a claim will only change your premium in that you will lose the discount
- How much is your deductible? How much more is the estimated damage than your deductible?
- How much will your premium increase moving forward on renewal? There is no set formula on what the increase on renewal will be. We typically estimate 20% for the next five years.
- Do the math - after you pay your deductible, and consider the increase you'll be payming over the next five years, does it make financial sense to enter the claim?
Here's an example
If I have an at-fault claim and the damage to my car is $2,500, and my deductible is $1000, that means the insurance company will pay $1,500 for my repairs. My policy premium is $1,200/yr and if it increases 20% that equals $240 x 5y = 1200. If I add my deductible that I paid ($1000), plus 5 years of increased insurance ($1200) that equals $2200. Pretty close to the total claim on my car. This brings us to our last piece of advice.
Think long term.
Our final note on claims would be to think long term. After your calculations, is it prudent to enter a claim? This is especially true for property claims. With extreme weather events, is it possible that a much larger claim that isn't financially feasible to pay for yourself could happen? Having more than one claim in a short period of time (within 5 years) limits insurance options for the future.
Talk to us to help determine if opening a claim is right for you.