Read This First
Things You Should Know BEFORE You Submit Your Claim
Dear Most Valued Client,
You’re probably reading this because you recently had a car accident or suffered some other kind of loss to one of your vehicles, your home or your business.
And you’re wondering …
- Should I submit a claim to my insurance company or not?
- Will there be any negative consequences?
- Will my price go up? By how much?
- Can my policy be canceled … and what happens then?
Those are very important questions. And while every situation is different, I’d like to provide you some inside information to help guide you to your answers. But, admittedly, you can’t get a specific answer to your specific situation in this report.
Why not? Two reasons.
First, there are many factors that determine the true impact of a claim on your policy. For instance …
- Each kind of insurance is subject to specific regulations – especially involving cancellation,
- Each insurance company has its own internal rules and practices,
- And your personal claims history and circumstances will trigger those rules and practices differently than, say, your neighbour’s.
Second, once you have the facts and know what the impact will be, you must inform your motor insurers, it is a policy condition. Insurers require that all motor claims be reported as they share information between each other. The claims records are kept for 5 years from the date of the incident, so if you fail to report a claim and the other driver does, then the insurers could regard this as a breach of your policy conditions and they may refuse to deal with the claim. So, in order to avoid this habendi to you, we will guide you through the claims process by our Claims experts who will guide you every step of the way.
The bottom line is this …
If you’re concerned about the potential impact of submitting your claim, contact us and discuss your situation! (This is just one of the many benefits of doing business with me and my dedicated team instead of some faceless 0800 number somewhere.)
We’re here to advise and counsel you … to explain how your insurance really works. We’ll give you the facts BEFORE you submit your claim and help you make the best decision – for you.
Now … here are the more important factors that come into play. But first …
Isn’t This What My Insurance Is For?
Yes … insurance is for paying claims.
You elect the protection options and limits you want. You pay your premium. Your insurance company pays your covered claims.
That’s the deal.
Then why all this talk about the “consequences” of claims? Why can claims increase my price or even get my policy cancelled? That’s what insurance is for!
That’s absolutely true. It’s just not the whole story.
I don’t want to turn this report into an insurance manual, and you don’t want that, either! But this is a common question I get from clients, so I want to explain it to you here … very simply.
Insurance, and the price you pay for it, is based on risk – the risk of a loss occurring. High risk of loss means higher prices are necessary to pay for those increased losses. And low risk of loss means lower prices. I 'am sure you agree that make sense?
Now, what determines the level of risk? Lots of things. But claims experience is one of the most important.
Statistics show that people who have a claim are more likely to have another claim. So, when compared to someone with no past claims, someone with claims on their record represents a higher risk of loss to the insurance company.
And you already know what a higher risk of loss means. Yes...higher premiums.
Therefore, when you have a claim you now represent higher risk of future loss to your insurance company. And sometimes that increase in risk will be met with an increase in price.
This allows the company to keep prices lower for people who represent lower risk.
The Size of Your Loss
Clearly, if you have a £20,000 car crash and the vehicle is written off…or £50,000 of damage to your home…or £35,000 of stock stolen from your store, it’s highly unlikely that you would even consider not submitting that claim. That IS what you buy insurance for!
On the other hand, small losses can sometimes increase your premiums, even if it wasn't your fault. But that's why we here to help you and size up the cost to you now in the repairs and then try and work out the long term cost to you due to lost No Claims Bonus. The consequences of submitting the claim may outweigh the money you receive from the company, so let's get you the right advice so you make an informed decision about your claim.
Sometimes it just makes sense to pay your loss yourself but remember your insurers still have to be told.
Your Excess has a direct impact on whether you should submit your claim or not on property insurance.
A quick review … Your excess is the amount you pay out-of-pocket toward the amount of your loss. The insurance company then pays the balance.
For example, let’s say you suffer £3,000 of damage to your home under a claim. And let’s say your excess is £250. In this case you pay £250, and your insurance company pays the remaining £2,750.
Clearly, if the amount of your loss is less than your Excess there’s no point to submitting your claim for property damage. You’re going to pay it all anyway, so why report it?
For example, if your excess is £1,000 and your suffer £800 in damages, then your insurance company isn’t going to pay anything. The amount of damage is less than your Excess. You’re responsible for the first £1,000, so you’re responsible for the full £800 in this case.
But here’s where it gets a little tricky.
What if the loss is just a little bit more than your deductible amount? What if your Excess is £250 and the damage is, say, £500?
In this case, your damages are only £250 more than your Excess. Therefore, you’ll receive only £250 from the company. Is it worth getting £250 to suffer the consequences of submitting the claim?
It depends. It depends on what those consequences are!
Depending on the type of loss and your personal situation, this claim may cause an increase in your rates, possibly a significant increase. It may cause your policy to be non-renewed.
You may find – once you know the exact situation for your personal circumstances – that it’s less costly for you to pay the additional £250 out-of-pocket and keep the claim off your policy.
The point is … unless you know what the impact will truly be you can’t make a good decision. So, if you’re not sure, get the facts. We can help you way up whether to claim or .
Did Someone Get Hurt?
Many incidents involve only property damage. For example, maybe the wind blows some tiles off your roof. Or perhaps you back into a Lamp post in a car park.
The point is nobody’s hurt. There are no injuries.
When your loss involves property damage only, it sometimes makes sense to take care of it yourself and avoid the consequences that come with submitting the claim. You pay for the damage and it’s over.
However, when someone’s injured it’s never a good idea to keep that to yourself. Why?
Because no matter how minor the injury may be, the injured party can come back and sue you many months or even years later.
If that happens and you didn't’t report the claim when it occurred, your insurance company can legally refuse to defend you in the lawsuit and deny any payment, as well.
Your policy requires you to report your claims promptly so the company can control the claim. If you don’t, they can deny you cover.
In the case of a small property loss, nobody’s ever going to come back and sue you. But when someone’s injured you never know. Defending yourself in court is expensive – even if you win – so don’t take a risk when someone’s injured. Always report those claims.
Company Rules and Practices
Regardless of what TV commercials try to tell you, every insurance company is different. They all have their own rules, practices and rate plans. And they all treat claims differently, too.
Some companies have a price for just about everybody. That means that no matter how bad your claims record gets they’ll keep you insured. Of course, your price will go up and up to match your claims experience!
On the other hand, some companies don’t have a price for everyone. When your claims record gets too bad, they’ll non-renew your policy (within the circumstances allowed by law). When that happens you’ll be forced to get insurance elsewhere, and it’s likely you’ll pay a significantly higher price with a new company.
Financial Services Authority
FSA rules protect you, the consumer. Among other topics, those laws define the circumstances under which a policy can be canceled or non-renewed. Depending on the type of insurance, these regulations can provide you a lot of protection or very little.
For example, personal motor insurance is generally well protected by the FSA. An insurance company can cancel or non-renew a policy if the insurer believes that you have with held information material to the claim you are making, over inflate a claim or provided information which is materially wrong or missleading in order to have a claim paid. Under these circumstances the regulations will not help you.
However, other lines of insurance – like business insurance, for example – have fewer such defined cancellation criteria. In many cases, the insurance company can non-renew your policy just because they don’t want to keep your risk on their books.
I can’t emphasize this enough … there are guidelines for how insurers handle your claim, but you must be open and honest about what happened and how much the claim will cost otherwise the implications can be dire.
If you’re wondering whether or not it makes any sense to submit your claim, give me and my team a call FIRST. Get the facts for your specific situation. And then make an informed decision.