The purpose of home or auto insurance is to help you manage risk and avoid a financial catastrophe. If you’re like most people, you would have difficulty covering the cost of repairing or replacing a significantly damaged home or automobile out of your pocket. When you purchase an insurance policy and continue to pay the premiums, you’re transferring the risk to the insurance company. The carrier then bears the responsibility of providing coverage.
The process for receiving payment from your insurance company begins with filing a claim. The insurer will assign a claims adjuster to investigate the incident and determine whether coverage applies — and how much money you’re entitled to receive. However, there are some situations where filing a claim might not be in your best interests.
Suppose you’re in an auto accident in Missouri. Regarding auto insurance, Missouri is a “pure comparative negligence” state, meaning drivers can receive compensation for their loss in proportion to their degree of fault for the accident. For example, if your damages total $10,000 and you’re deemed to be 10 percent at fault for the accident, your insurance company would be responsible for $1000, while the other driver’s carrier would cover the rest.
Now, let’s say you carry a $1000 deductible, which is the amount you must pay out of pocket before the policy goes into effect. In the above situation, it would be in your best interest to file the claim with the other company, then you wouldn’t have to wait for your deductible to be returned and you wouldn’t have a not-at-fault accident on your record. Here is why, by reporting the incident to your insurance company, you now have an accident on your record. This could impact you in several ways:
Thus, in situations where an accident results in minor damage or you believe the other driver is primarily at fault, it might not be financially prudent to file a claim with your insurance company. Also, it’s important to note that in Missouri, carriers are permitted to “rate” for not-at-fault accidents — some do and some don’t — which means you could end up paying more for auto insurance because of someone else’s poor or negligent driving.
A similar concept applies to homeowner’s insurance. If high winds blow a shingle or two off the roof of your house, the cost to replace them is likely to be less than your deductible amount. If you file a claim with your insurance company, you could still end up covering the total cost out of pocket — and have a claim on your record that could have future implications.
While companies such as State Farm, Allstate and Farmers must file a claim when reported by a policyholder, David Pope Insurance Services, LLC takes a different approach. As an independent insurance agency, we can discuss the situation with you beforehand so you can decide if filing a claim is in your best interest.
Contact us to request a no-obligation quote for home or car insurance in Missouri, Arkansas, Iowa, or Kansas.