As an insurance brokerage, we get this question quite often from clients who are concerned about their insurance rates going up after filing a hail damage claim. The answer to this question is not straightforward, as it depends on various factors.
First, it’s important to point out that insurance rates are based on risk. We talk about that here, if you’d like more details. When you file a claim, you are essentially telling your insurance company that you have had an incident that has increased your risk profile. In other words, once you file one claim, you’re more likely to file another. In this case, filing a hail damage claim means that you are more likely to file a claim in the future, which increases your risk profile.
However, the impact of a hail damage claim on your insurance rates can vary depending on the severity of the claim, the frequency of claims, and the insurance company’s policy. If your claim is relatively small and your first claim in a while, it may not have a significant impact on your rates. On the other hand, if you have a history of filing claims, even for small incidents, your rates are likely to increase.
It’s also important to point out that if you file multiple claims in a short period of time, no matter how small, you may have a hard time finding anyone who will insure you.
It’s also worth noting that some insurance companies offer a first-time forgiveness policy, which means that your rates won’t increase after your first claim. However, this policy varies from company to company, and it’s important to check with your insurance provider to see if they offer this policy.
After explaining this, many clients often ask “how is a hail claim my fault? Why should I be punished for this?”.
This is a good question, and it’s understandable to feel this way. However, remember that your insurance company is paying for this claim, it’s not their fault either. In order to stay in business and to have enough money to pay these claims, insurance companies need to raise rates when someone has filed a claim.
The most important aspect of this question is to remember that your home insurance is for large, catastrophic events. In these cases, don’t be afraid to file a claim. Smaller, insignificant events should not be claims filed. Call your agent if you’re unsure if you should file a claim or not.
Should I Claim Damage On My Car?
Should you file an insurance claim and claim damage on your car? There is no straight answer here as it varies from situation to situation.
Remember, insurance is for large, catastrophic events. Not for minor scratches and dents. If you cause damage to your vehicle that is under $2,000, you may want to reconsider filing a claim on your car insurance policy.
Let’s take an example to illustrate:
- Damage to your vehicle is $1,800
- You have a deductible of $500
- Your final payout is $1,300 ($1,800 – $500)
So you get $1,300 from your insurance company, but now you have to worry about your rates increases for the next 5 years. Over those 5 years, with your increased rate, you will pay more than the $1,300 you received from your insurance company. In the long run you lose.
This is not to discourage anyone from using their insurance, that’s why you have it! However, you still want to be smart about when you claim damage on your car insurance policy.
If you have any questions on how this works and if you should or should not file a claim, please reach out to us!