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I think we can all agree that insurance is one of those things we don’t like—until we need it. But, can using it cause more harm than good?

We know from this blog that claims can, in fact, increase your insurance payments. So, yes, using your insurance can cause more harm than good.

So when is it safe to use your insurance and file a claim?

Weigh cost of repairs vs deductible.
Google defines a deductible as, “a specified amount of money that the insured {you} must pay before an insurance company will pay a claim.” So, if Sally Sue backs her car into a tree and damages her vehicle, there will likely be needed repairs. If the cost to repair the damages is $500 and her deductible is $1000, she would not need her insurance. She would have to pay her deductible ($1000 in her case) before the insurance company would pay for repairs.

Now imagine if Sally Sue caused extensive damage to her car, say $1700 worth. If she filed a claim, she would have to pay $1000 first (her deductible) and then her insurance company would pay the remaining $700 to complete the repairs.

But even then, is it best for Sally Sue to file a claim in this situation?

Weigh your costs vs your savings.
Filing claims can increase your future insurance payments. So, preventing claims is overall a good strategy. For Sally Sue’s situation, she may be able to avoid a claim altogether by paying the entire $1700 herself. This would keep the claim off her record and keep her from having to deal with the insurance company as part of the repair. However, if Sally Sue only had $1050 saved in her bank account, she would not be able to handle the repair on her own. She is $650 short. She would need the insurance company to pay the difference.

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Determine the need.
If the damage to Sally Sue’s car is only cosmetic, she may not need to get the repairs done. However, if her bumper is dragging on the ground, and her fender is bent so much that her back tires can’t move, she likely needs to get the repairs.

It’s not always a good idea to file a claim. Determining how bad a repair is needed, weighing the cost of the repair against your own savings, and comparing the cost of the repair against your deductible can help you determine if filing a claim is a good idea.

This may be a complicated process, but GOOD NEWS! We have an insurance agent that can help you answer questions for your specific situation. To talk to our wise insurance advisor. Schedule time below!