Think Before You File That Claim

When something bad happens and your property is damaged, your automatic reaction is to reach for your phone and file an insurance claim. Well, after learning how insurance companies look at certain claims, you may want to think twice.

Although CLUE was originally purposed to prevent insurance fraud, it is now used for other purposes. About 98 percent of insurance companies use the CLUE database to determine who gets insurance and what rates they will pay. The insurance company wants to see how many claims you have filed in the past and what type of claims. Insurance companies are particularly concerned with certain types of claims.

Water Damage
Water damage signals potentially bigger problems to an insurance company. If the issue is minor, you may opt to take care of the financial responsibility on your own and leave your insurance company out of it. Even minor water damage claims can affect the ability of a new homeowner to get home insurance and possibly your ability to sell the house.

Home Maintenance Issues
What if a portion of your home is damaged by termites and you need it repaired. Or what if someone slips and falls on your property. These claims can signal that you do not maintain your home from the viewpoint of an insurance company. This could mean your house may be the source of more claims in the future especially if it is poorly maintained and vulnerable.

Dog Bites
Did you know that insurance companies compile information on certain types of dogs? You may find that your choice in family pet can affect your premiums and ability to get insurance even if you have never filed a claim related to your dog biting someone. Dog bites are the number one claim filed for home insurance policyholders. With a dog bite there is an increased possibility that the dog will attack again in the insurance company's eyes. If your dog does bite someone, this could affect your ability to renew your insurance and it will certainly make your premiums go up.

Filing Minor Claims
In general, financial experts recommend handling any auto or home insurance claim under $1,000 yourself. Filing many minor claims can damage your insurance score. Most recommend that insurance only be used for claims that could cause serious financial burdens, not mere financial inconveniences. If you decide to stick to this advice, raise your deductible to $1,000 to cut your insurance costs.