You’ve got a policy with a $500 deductible, say, and you’ve just suffered an $800 loss. Any elementary school student can tell you that your net insurance recovery will therefore be … zero, if you’re smart. Why? Because the smart thing ordinarily would be not to make a claim. In the first place, you spare yourself the hassle. But mainly, you forego the possibility of losing your status as a preferred risk.
Regulations vary from state to state, and policies for dealing with such situations vary from insurer to insurer … so it may sometimes be fine to file such a claim. But it is a statistical fact that people who file a claim are more likely to file another one than people who haven’t so insurers prefer customers who don’t file claims.
Clearly, it’s a matter of judgment. If you had a $500 deductible and a $520 loss, you surely wouldn’t file the claim. (Would you?) If you had a $500 deductible and a $6,000 loss, you almost surely would. (Wouldn’t you?) Where do you draw the line?
Your agent can give you good advice in this regard, if you buy auto insurance through an agent; and you may even get some helpful advice from your insurer’s phone reps if you buy insurance direct.
But this is one more reason to take large deductibles. The first reason: Why pay someone to take a risk you could afford to take yourself? Over a lifetime of self-insuring for such small risks, you’ll get to keep all the money that would otherwise go to insurance company overhead and profit. The second reason: It’s less hassle not to have to involve an insurer in the small stuff. The third reason: Why pay for coverage you might not even use in the first place?
Quote of the Day
If you think it's messy there, said Albert Einstein of his paper-strewn office, you should see it up here, he smiled, pointing to his head.~.
Request email delivery
- Jan 19:
Patented Shopping Tips
- Jan 18:
How Tall; The Wall
- Jan 17:
- Jan 16:
The Most Important TED Talk You’ll Ever Watch
- Jan 15:
The Progessive Case For Trump’s Stupid Wall
- Jan 12:
Books, Bikes, and Backpacks
- Jan 11:
NKTR, BOREF, and “How They Get Away With It”
- Jan 10:
Car Loans, iPhones, SPRT — and Founding Flubs
- Jan 9:
- Jan 8:
How Democracy Dies
- Jan 19: