Insurance is essentially a game of risk that one plays in life. The insurance company rates the potential client on how many claims they have filed in the last three to five years, what coverages that client has held on their belongings, what carrier that client has, and overall creates a score based on their findings. This score is similar to a credit score, in that your financial responsibility is important, but credit does not impact your insurance rating with all carriers. The higher the liability coverages that a client has carried on their homeowner’s and auto insurance, the more financially stable a client is viewed as, and the least amount of claims filed will give a potential client the best insurance score.
Insurance is one of those things that is imperative to have but not always the most beneficial to use. Filing claims can have both short and long term effects on your insurance rates. For small claims, like cracked windshield glass on a vehicle are best repaired out of pocket. As an insurance agent I hear all the time, “I have never had an accident my rate should be perfect!” but the same person filed two glass claims and had to be towed once which all negatively impacts your insurance score. Each time an insured utilizes their insurance it goes on record to be used in scoring the insurability of the person at renewal. The insurance company has the right to non-renew the insured if they have filed too many claims as the insured is viewed as too high of a risk.
Overall, insuring your home and automobiles is done out of necessity. Choosing the highest limits of coverage for both ultimately increases your insurance rating as long as you never actually utilize what you pay for. $500,000 liability coverage on one’s home and $250,000/$500,000 on each automobile is becoming the new standard in today’s market. For most impactful insurance scores carrying the premium coverage, while simultaneously never filing claims, will be the most beneficial to the future client.
