Insurance is meant to protect you against financial loss. But is it really meant to protect you from any and all financial loss? When it comes to filing a loss claim on your home insurance, there may be times when not filing may be the wisest course of action.¹

According to one study, filing just a single claim could increase your monthly premium by 20 percent, depending on where you live.²

What About My Premium?

Some insurance companies may protect you against premium increases, and in Texas, insurance companies are even prohibited from increasing rates following a first claim. However, if filing a claim means your premium will rise, you may need to decide whether it makes sense to do it.

It may not pay to file a claim if:

• The claim amount is small. Your policy will have a deductible, so even claims of $1,000 to $2,000 may not have a favorable long-term cost benefit.
• You’re not covered for a loss. Read your policy first to determine coverage. The simple act of filing a claim (even for a claim that won’t be paid) may result in higher premiums.
• You have filed a claim within the last seven years. Since previous claims are tracked by an industry database for seven years, it may result in higher premiums.

Another factor to consider: you may want to file a claim regardless of dollar amount if someone is injured on your property, in order to protect yourself in the event that you are sued by the injured party.

1. Several factors will affect the cost of homeowner’s insurance, including the location, size and contents in the home. You should consider the amount of your deductible and level of coverage before purchasing a policy. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.
2. National Association of Realtors, 2019

The ownership structure of a condominium unit is different from that of a single family house. Here’s what you need to know when purchasing insurance for your condo.¹

1. Understand the Master Policy

Since the ownership of all common areas is shared with other condo owners, the association of owners typically purchases insurance coverage (a master policy) for the common areas, e.g., hallways, exterior walls, etc. The condo association’s policy will outline what is covered and what is not.

2. Three Types of Coverage

There are three basic types of coverage under a master policy.

• Primary buildings and common areas
• Your unit and any items within your unit, other than personal belongings
• Building, unit, and any fixtures

The individual coverage you may consider depends upon the scope of coverage of the master policy. Start by determining what is and isn’t covered under the master policy – this can influence the coverage you may need.

3. Know the Master Policy Deductible

Generally, an association’s master policy has a deductible that is charged pro-rata among unit owners in the event of a claim. Determining that obligation is important because while it may never materialize, it could represent a meaningful financial commitment.

4. Consider Additional Coverage

Similar to any homeowner, you will need to make decisions about other coverage options, such as cash value or replacement coverage, adding personal liability coverage, and whether flood insurance may be appropriate.

1. Several factors will affect the cost of condo insurance, including the insurance coverage provided by the homeowners association. You should consider the amount of your deductible and level of coverage before purchasing a condo insurance policy. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

In 2020, there were 16,991 dog bite claims nationwide totaling aggregate damages of about $854 million, according to the Insurance Information Institute.¹

For most homeowners (and renters), a standard policy generally covers any legal liability that may result from their dog biting or harming another individual. Typically, this coverage is designed to extend to places outside the home (e.g., a walk in the park), but may not include what happens inside a car.²

However, this coverage is not unlimited. There is a cap to liability coverage (check your policy for the limits of your coverage), and your policy may limit such coverage to one bite.

Canine Considerations

Many insurers may either cancel the policy or add a canine exclusion after paying such a claim, which means that you will be responsible for all damages in the event of a second bite.

Some policies exclude certain dog breeds from the outset, so be sure to review your coverage to ensure that your dog is not among the excluded breeds.

Also be aware of a business exclusion that may not pay on claims arising from a dog bite that occurs while you are conducting business in your place of residence.

Finally, it is important to let your insurer know if your dog bites someone or is declared dangerous under local law. Failure to inform them may affect liability coverage for subsequent injuries caused by your dog.

An insurance deductible is an amount you, the insured, pay before any claim is paid by your insurance carrier. Depending upon the type of insurance, a policy may set the amount of deductible, or offer you the ability to select a deductible amount.

Deductibles serve a dual purpose: they save the insurance company money (including the administrative cost of processing small claims) and may help keep your premium costs lower.

Choosing the Right Deductible Amount

Generally speaking, the trade-off between deductible levels and insurance premiums is simple: The higher the deductible, the lower the cost of insurance. Conversely, the lower the deductible, the higher the cost of insurance.

Deciding how to make that trade-off is a function of math and your own comfort level with higher out-of-pocket costs if you choose a higher deductible.

Only you can decide if saving $65 a year in premiums for a deductible that is $500 rather than $200 is worth it to you. You may find that the relationship between deductible amount and premium cost is different depending upon the type of insurance. For instance, the savings with a higher deductible may be significant with auto insurance, but much less so with homeowners insurance.¹

Not only will this relationship between deductibles and premiums differ based on insurance type, but it may differ based upon other factors, such as your age and the value of your car, for example.

When you consider the appropriate deductible level for health insurance coverage, remember that deductibles may be on each member of the family.

When shopping for insurance, you should always ask your insurance agent what the premium costs are at each of the available deductible levels. Knowing that information may help you make a sound decision regarding your coverage.

About 12.6 percent of all motorists, or one-in-eight drivers, do not have automobile insurance, according to the Insurance Research Council.¹

Having the misfortune to get into an accident with an uninsured motorist may have serious financial consequences, depending upon the state in which you reside and whether it is a “no-fault” or “tort” state.

In no-fault states, the law does not assign blame for an accident. As a result, each driver is reimbursed by his or her insurance company for any damages. In a “tort” state, insurance companies pay out claims based upon the percentage of fault assigned to each driver.²

Any accident with an uninsured driver means no insurance reimbursement payment for his or her apportioned share of the damage. This can leave you holding the financial bag.

How to Protect Against Uninsured Drivers

Some states require drivers to take out insurance for uninsured (and underinsured) motorists. Where not required, it may be a good idea to add that coverage to your auto policy.

You can buy protection against uninsured (and underinsured) drivers for both bodily injury and property damage. This coverage may also be valuable in cases where an insured motorist flees the scene of an accident without trading insurance information.

The first step to protecting yourself against this potential financial risk is to contact your insurance agent to discuss your current coverage, applicable state insurance laws, and what you need to do to obtain protection against uninsured motorists.

One landmark study found that credit-based insurance scores are used by about 95 percent of all auto and home insurers in calculating the cost of insurance to individuals.¹

While the vast majority of insurance companies use credit-based insurance scores to help determine the price of insurance, it is banned in the states of Massachusetts, Hawaii, and California. Some states only allow it as a factor for property insurance like auto and homeowners insurance. Other states allow it to be used with any type of insurance.

Several Factors

Generally, an insurance company will use a credit-based insurance score as just one factor in its underwriting process. Other factors may be considered, depending upon the type of insurance. For example, with auto insurance, other factors could include your zip code, the age of the drivers, the make, model and age of the car, and the number of miles you drive annually.

The use of credit scores to determine insurance rates is rooted in research that has shown individuals with lower credit scores had higher car insurance losses and higher claims payouts.

You can ask your insurance company if a credit-based insurance score was used to underwrite and rate your policy, and in which risk category you were placed.

If you want to improve your credit-based insurance score, you should consider taking the same steps you would to improve your credit rating: make timely debt payments, clear up past disputes and keep credit card balances low.