Don't do that! Actions that will wreck your insurance claims
Having to make a car insurance or home insurance claim is never a good situation — it means you've experienced damage or loss, possibly significant. Don't make matters worse by taking the wrong action. Below are common ways that policyholders shoot themselves in the foot.
In your car
After a car accident, don't jump to the conclusion that it's a minor fender-bender.
Too often, feeling flustered and shaken, drivers involved car accidents will look at small exterior dents and scratches and decide that damage is minor. But there could be major structural damage that's not visible, such as a cracked axle. It's best to get the name, address, driver's license number and insurance ID number of all those involved in order to protect yourself if you need to make an insurance claim.
Peter Moraga, spokesperson for the Insurance Information Network of California, says, "It's a good thing to get your car checked out — the same for your body. Sometimes people don't show injury until one to three days later."
Don't be "sorry" after a car accident.
If you're involved in a car accident, don't say you're sorry or admit fault at the scene of the accident.
If an accident is your fault, your insurance company is responsible for paying damages and it goes on your insurance record, so don't take the blame at the scene if fault is not clear — let the police decide who was at fault.
Think carefully before adding towing and roadside assistance to your car insurance policy.
The cost of adding this is typically very low per vehicle (such as $10 annually), but any time you use the coverage it will go down as a claim on your car insurance record. If you amass claims, even small ones such as towing, you'll find your rate goes up at renewal time or, when you shop for new insurance, you won't be offered the best rates due to your claims history.
In the end, it's better to keep your claims record clean than to get a bargain price on towing and roadside assistance.
Don't hire a tow truck that's circling the scene of your car accident.
Those trucks driving around your accident weren't sent by the police or an act of God. They're drivers who listen to the police scanner and then rush to accidents — and they may be unlicensed or charge an arm and a leg. If you don't know a reputable towing company in the area, call your agent or insurance company to ask who they recommend for towing.
Don't neglect to actually read your policy.
Many policyholders fail to understand what they're entitled to simply because they've never cracked open their policy.
"A lot of people don't know what they have, and that goes for all lines of insurance," says Moraga. "People will buy auto insurance and never read the policy to understand whether they have comprehensive coverage or uninsured motorist coverage. The more you know about your policy, the better prepared you'll be."
Don't choose a car insurance deductible you can't afford.
When money is tight, raising your insurance deductible in order to lower your car insurance rate can be appealing. But that choice is coming back to bite many drivers after accidents.
Dan Young of CARSTAR, a collision-repair network with almost 300 locations, reports that he's seen customers who have raised their insurance deductibles from $100 or $250 to $500 or $1,000 — and down the road can find themselves without the cash to cover their share of the repair cost.
"Even when insurance checks are in hand, the customer may not be able to afford their portion of the loss, so it's not being fixed," he says.
Don't delay reporting damage to your home insurance company.
Moraga says this is one of the most frequent mistakes policyholders make, especially in cases of major house damage or a total loss.
"Some people will wait and say they have to get their stuff together. Contact your agent immediately to start the process. The sooner you start, the sooner the claim will wind its way through," Moraga says. He notes that policyholders may be in shock, or they may be busy trying to get an apartment if their home is uninhabitable. But he emphasizes that "you want to understand that the insurance company is there to help you out, especially if you don't know your coverage."
On the other hand: Don't call your home insurance company to report damage if you're not going to make a claim.
Let's say your fence is damaged during a thunderstorm and you call your home insurance company to ask whether it's covered; later you decide to fix it yourself because the repair cost is lower than your deductible.
Your inquiry about your loss or damage will likely be recorded, not only in your insurance company's internal records but also to ChoicePoint's C.L.U.E. (Comprehensive Loss Underwriting Exchange) database. Your C.L.U.E. report details losses reported on your property and losses reported on you (such as your liability for damage to others). Incidents stay on the record for seven years and can are accessed by most insurers.
One phone call won't haunt you, but multiple inquiries about various damages or inquiries combined with actual claims could lead to a higher rate at renewal time — or difficulty finding a company to insure you if you want to shop around. Here's more on how one five-minute call to your insurance company can dog you for seven years.
Don't throw out your receipts.
You'll need receipts in order to support your claim. For example, if your car is towed after an accident, save the towing receipt.
If you can't live in your house due to damage, receipts for your "additional living expenses" (ALE) are crucial. Your home insurance will cover your expenses when you have to live somewhere else during repairs. This includes hotels, meals and laundry.
Moraga points out that ALE also covers mandatory evacuations — such as evacuations ordered for hurricanes or wildfires. He notes that when homeowners must leave quickly, they often need to purchase things like medicine and additional clothing. That's covered by home insurance, and you need your receipts.
After house damage, don't start repairs until your insurance adjuster has seen the damage.
However, do make repairs that are needed in order to prevent further damage, such as wind and rain coming in.
If you embark on fixes before your insurance company has documented the extent of damage, you may end up not getting all to which you're entitled. The insurance adjuster won't be able to accurately record the initial damage. You don't want to lose out on claims money by being too proactive in this case.
Don't neglect to have a home inventory.
If you were to lose countless possessions from a disaster or theft, would you know everything you had? Keeping a home inventory — which can be as simple as walking around your house with a camcorder in hand — could save you substantial time and money in the future.
Another easy way to make an inventory: The Insurance Information Institute offers free "Know Your Stuff" home-inventory software.
"Do you remember how many sheets you had in the house, how many curtains, how many car[ets?" says Moraga. "The best thing is, after the claim is settled, that's your shopping list. That's what you have to buy in order to make your house a home again."