Insurance claims: Don't worry, I'm covered

Someone just backed into your car in a supermarket parking lot, then took off, leaving you with a dinged fender and a smashed taillight. Should you file an insurance claim and take the chance that your premiums will soar as a result?

Or maybe a storm toppled a tree and caused several hundred dollars worth of damage to your garage. Is that a worthwhile claim? Or will you just wind up giving the money back to the insurance company through increased premiums?

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To find out, we canvassed insurance brokers across the country. Here’s what they told us:

• You should always make a claim on your car insurance if the damage was the result of something outside of your control. So if someone backs into your car in a parking lot and disappears, or if a stone hits your windshield and cracks it, or if hail destroys your new truck’s new paint job, get on the phone to your insurer. “Even if the damage is several thousand dollars, claims like this won’t impact your premium,” says Cory DiRosa of DiRosa Insurance in Oakville, Ont.

• If in doubt, do the math before you file to see if an auto accident claim is worth it. Most insurance agents or brokers will walk you through the decision, which will vary by province. In Ontario, a single at-fault accident will probably boost your premiums by 15 per cent or more for six years. But two at-fault accidents in under three years can double your premiums for years to come. In B.C., two at-fault accidents will boost your premiums anywhere from 40 per cent to 200 per cent, depending on your driving record.

• If you’ve been using the same company to insure your home for five years or longer, some insurers will allow you one free claim before raising your premium. “So if your $2,500 golf clubs are stolen, it’s your first claim and you’re a long-time customer, make the claim,” says Vicki Van Santen, an insurance broker with Generations Insurance in Toronto. On the other hand, if you’ve been with your current insurer for only a couple of years, a single claim will probably boost your premium by 10 per cent or more for three years.

• Don’t claim damages of less than $1,000 on your home insurance. It’s simply not worth your while. Most policies have at least a $500 deductible, so at most you stand to get a couple of hundred dollars — but you may wind up paying substantially higher premiums in years to come as a result.

• You should claim for any major house damage. So long as the damage was the result of an accident, and so long as it was your only claim in the past five years, even a $50,000 claim should not affect your renewal. But beware frequent, small claims. Insurers will usually not renew you after your third claim in five years, even if all the claims were minor. “It all boils down to frequency with home insurance claims,” says Van Santen.

• Since it doesn’t pay to make small claims on your home insurance, the smart strategy is to raise your deductible to $1,000. The higher deductible will save you up to 20 per cent off your premium annually. “Higher deductibles mean lower premiums,” says Bob Fitzgerald, executive vice-president for Aviva Canada in Toronto. If you feel you can afford the risk, you can raise your deductible to $5,000 or more and cut 40 per cent or more from your annual premium.

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