Should you file small claims?

Should you file small claims?

It is very important for you to understand when to file a claim and when to not. You must be thinking, how filing a claim can turn out bad? Or this is what we bought insurance  for. However this is not how insurance companies work in the realistic world.

If you have an Homeowners insurance, car or auto insurance, rental insurance or any other kind of insurance, there are many factors that play an important role in analysing the premium that you have to pay annually, and filing claims can affect that. So before filing a claim you should see if it’s worth it?

When should we file claims?

In cases of Serious damages caused by fire, theft or other such circumstances, which have cost you a lot, only then should you consider filing a claim.There are certain factors that you should look upon to analyse if processing the claim is profitable in the long run

Is the damage less than the deductible amount?

It is necessary for you to consider how much the damage will cost to repair. There are many ways through which you can get an estimate, for example by asking a professional that is in the case of a car you ask a mechanic etc. You can also look up a rough estimate online for common things and calculate an estimate of your loss.

If the calculated amount is less than your deductible, for example if your insurance has a $1000 deductible, and the damage will cost you anything less than the deductible, then it’s useless to file the claim because your insurance company will not cater it. However if it’s more than your deductible amount, it may still be worth filing a claim.

How big is your emergency fund?

If you have enough money to cover the cost of the repairs out of pocket, consider how much it could save you to just pay for the damage yourself vs. filing a claim.

If per say your amount is more than your deductible amount, but the difference is not that much, you than may be able to save money in the long run by paying for the damages yourself and not risking a rate increase. For example, let’s say you had a $2,500 deductible and the cost to cover the damage was $2,750. In this case, you’d only get a $250 payout. But you may pay much much more than that over time in the form of a rate hike.

You can also ask your insurer about the raise in your premiums if you file such a claim, it will then get easier for you to decide.

How long has it been since your last insurance claim?

Filing too many insurance claims and/or getting too many maintenance issues in a short time span can boost your premiums even higher. It may even cause your insurer to drop you when your policy expires.

If it’s been around five years that you have not filed a claim, only then you should consider doing it. Filing to many claims can cause your premium to go to a higher rate. Make sure your maintenance is done up to date because in cases of high frequency of claims, your insurer may cancel your homeowners insurance policy on filing too many claims and not maintaining the home properly.

Is a no claim bonus (NCB) available?

A no claim bonus (NCB) is a discount normally given by insurers on the renewal premium at the end of a claim-free year. This NCB starts at 20% at the end of the first claim-free year and increases steadily with every claim-free year to a maximum of 50%. Even if a single claim is made, the NCB goes back to zero, which is another reason for not making small claims.

So, before filing a claim you should calculate what is the NCB discount on your policy. Lets say if the discount is $6000 and your deductible is $2000. In this case if you make any claim less than $8000 it will act as a loss to you. Hence you shouldn’t file a claim unless your damage cost is greater than $10,000.

If your insurance policy has a forgiveness policy?

Many insurance policies offer a forgiveness policy, that is you get one free “get-out-of-jail” card in which you can file a claim and not be penalized for it with a premium rate hike.

However such policies are only available one time, so you should also use your wildcard at the right time.

Turnouts of filing small claims?

If you have a history of filing small claims frequently than you are more likely to do them in the future as well. Comprehensive Loss Underwriting Exchange also known as CLUE is a way through which home insurers share information of the past seven years of claim record of a client. If you have a high claim record then you would also have a high insurance premium.

Moreover, filing small claims can also cause you to lose your insurance policy, a cancellation of your homeowners insurance policy is possible

It is also not necessary that your claim gets passed, hence filing a claim that may later on get denied may also ruin your record and cost you no claim bonus.


Filing claims is your right, and you might be bewildered in the thought that why do you have to think so much before filing a claim. The answer to your question is, “Reliability”. You need to keep your track record clean if you want to avoid any high strikes in your premium rate. Comprehensive Loss Underwriting Exchange  only maintains records of 5 to 7 years. So before filing a claim you should analyze the worthiness of your claim. However in cases of damages due to perils you should not hesitate before filing it. Always calculate the cost a claim will cause you before filing it!

Incase of further details, you can also contact our representative and ask for detailed information.

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