Each year the average American spends about $6,300 on insurance.

With life expectancy rates hovering around 80 in the United States, this means you are on pace to spend over $333,000 on insurance in your lifetime.

And that’s not accounting for the yearly rise in insurance costs! Even modest predictions about the rise in insurance rates will push your lifetime bill north of $400,000.

And yet, many Americans remain hesitant to file necessary claims.

Indeed, for some, it’s a thing to brag about.

It’s not rare for us to hear statements like, “I haven’t filed a claim in over a decade!” or “I’ve had H.O. insurance since 1987 and never filed a claim!”

Although not filing claims can lead to marginal reductions in your premiums, this mentality misses the point of insurance and is not a long term savings strategy.

Insurance is a business. You shouldn’t feel proud about donating extra money to insurance companies and there is nothing wrong with receiving compensation for justified claims.

You buy insurance to protect your most valuable assets. Insurance companies provide it because it is a lucrative business model.

If you are going to fork over $400,000 to them, it’s appropriate to make necessary claims. However, people have various concerns: “do insurance companies track my claims?” “Will an insurance claim make my rates go up?”

To consider questions like this, let’s keep a couple things in mind:

  1. You pay your premiums to protect your property. When this property is damaged, filing a claim might be the best solution. If you don’t know if the damage justifies a claim, talk to a professional. Contact a local public adjuster or reach out to a contractor. For example, if you have a leaky roof, many contractors offer free estimates. Use this resource to inform your decision!
  2. It is important to make fair claims that are justified. Don’t fabricate claims or exaggerate damages. This might be insurance fraud and that is a crime.
  3. It’s true that insurers can track the amount of claims you make. Insurers utilize resources like the “C.L.U.E.” report to monitor your claims history. This report contains up to seven years of data. If you have a pattern of “nickel and diming” your insurer, they can use this report to calculate your premiums (which may lead to an increase in yearly costs). However, the potential for increased premiums does not necessarily outweigh the advantages of making a needed claim. Furthermore, making insurance claims does not guarantee a premium increase, particularly if you have kept point #1 and #2 in mind.

Insurance is a two way street. It should not consist of you paying exorbitant monthly premiums and never capitalizing when the time comes .

Rather, you pay your insurer to protect the most important things in your life. When these items are threatened, damaged, or destroyed, don’t be afraid of getting back what you deserve. That’s why insurance companies exist.

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