Filing an insurance claim: What not to do

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Making a car insurance or home insurance claim is never fun — it means you’ve experienced damage or loss, possibly significant. But, there are ways to make sure the process is as seamless as possible. Below are common mistakes policyholders make when filing a claim. 

1. Dismissing minor damage after a fender bender

Too often, feeling flustered and shaken, drivers involved in car accidents will look at small exterior dents and scratches and decide that damage is minor and drive away from the scene. 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.

Make sure to get your car and yourself checked out. Some injuries take a few days to appear. 

2. Taking (unnecessary) responsibility 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 before there has been an inspection into 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 the fault is not clear — let the police decide who was at fault.

3. 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. Usually, insurers won’t increase your rate if you use roadside assistance. But if you amass enough claims, there is a possibility your rate will go up when you try to renew your policy or when you shop for new insurance, you may not get 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. As an alternative, you can get a membership to AAA.

4. Hiring 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 serendipity. 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 so that you know you’re going with a good service. 

5. Neglecting to read your policy

Many policyholders don’t know what they’re entitled to simply because they’ve never read through their entire policy. Different parts of your policy will cover different financial obligations from an accident — for example, your comprehensive coverage and collision coverage will pay for different damages, and you may be entitled to more coverage than you think – although the reverse also could be true.

6. Choosing a car insurance deductible you can’t afford

When money is tight, raising your insurance deductible in order to lower your car insurance rate might sound like a good idea, but it’ll cost you if you have an accident.

For example, customers who have raised their insurance deductibles from $100 or $250 to $500 or $1,000 may find themselves without the cash to cover their share of the repair cost down the road. So even if you get the insurance check, you have to make sure you can cover the rest. 

7. Delay reporting damage to your home insurance company

When coping with major house damage or a total loss, filing a claim is probably the last thing on your mind. But you should contact your insurance agent immediately to begin the claims process. By contacting your insurer sooner rather than later, you will know what coverage you have and can get a better idea of how to proceed. For example, if your home is completely damaged, knowing your coverage limits means you can get a rental apartment within reimbursable limits. 

In addition to filing a claim, make sure to document all the damage with photos. 

8. Calling your home insurance company when 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, but you later 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 in your insurance company’s internal records and in the ChoicePoint’s CLUE (Comprehensive Loss Underwriting Exchange) database. Your CLUE report details losses reported on your property and losses reported on you (such as your liability for damage to others). CLUE reports show your last seven years of history and can be accessed by most insurers.

One phone call won’t haunt you, but multiple inquiries about various damages or inquiries combined with actual claims means you could pay higher rates when you go to renew your insurance — or you may have difficulty finding a company to insure you if you decide to get new coverage entirely. 

9. Throwing out your receipts

When you submit a claim, you’ll need to provide receipts to get reimbursed for your expenses. For example, if your car is towed after an accident, save the towing receipt.

Or if you can’t live in your house due to damage, you will have to provide receipts for your additional living expenses (ALE) are crucial. So when you pay for hotels or meals, save those receipts so that you can get reimbursed.  Your home insurance will cover your expenses when you have to live somewhere else during repairs. This includes hotels, meals and laundry.

Additional living expense coverage also pays for mandatory evacuations during natural disasters like hurricanes or wildfires. If you must leave your home quickly and need to purchase items such as medicine and additional clothing, it is covered by home insurance as long as you save your receipts.

10. Making repairs to your home before insurance adjuster has seen the damage

If you repair any damages before your insurance company has documented the extent of damage, you may end up not getting all to which you’re entitled because 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.

However, you absolutely should make repairs that are needed in order to prevent damage, such as wind and rain coming in. If an insurance adjuster finds that the reason for the damage was negligence, you may not be able to receive any funds to cover repairs.

11. Neglecting to have a home inventory

If you don’t have a home inventory, how would you know what all was stolen or damaged? Keeping a home inventory — which can be as simple as walking around your house and taking pictures on your iPhone — could save you substantial time and money in the future.

If you are taking notes, make sure to be as detailed as possible. For example, write down the amount of sheets or curtains you have in the house. 

Filing a claim isn’t as straightforward as it seems, and there’s a lot to keep in mind to make sure the process goes seamlessly. But you can avoid any mishaps by exercising extra caution when the need to file a claim arises.

Nupur Gambhir

Managing Editor

 

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Nupur Gambhir is a content editor and licensed life, health, and disability insurance expert. She has extensive experience bringing brands to life and has built award-nominated campaigns for travel and tech. Her insurance expertise has been featured in Bloomberg News, Forbes Advisor, CNET, Fortune, Slate, Real Simple, Lifehacker, The Financial Gym, and the end-of-life planning service.