SHOULD I CALL MY INSURANCE COMPANY OR PAY OUT OF POCKET?
For many people, the answer to this question may come almost automatically. Most people prefer using their insurance policy to cover the repair costs when they get home damages. We do this to avoid undergoing the cost of repair without considering other options.
However, there are instances when paying out of your pocket might be the better option. Below, we discuss some of the situations that merit you using your money to pay for the damages instead of waiting for the insurance money. Let's get into the details of the individual conditions that might lead to this decision:
WHEN THE DAMAGE IS MINIMAL
If you can comfortably pay for the minor damages, it is best to do so. For example, if you have a minor clumsy accident and damage your fence, you may choose to handle the costs independently. Filing an insurance claim may take longer and may impact future premiums.
The more you ask the insurance to pay for repair costs, the higher your future premiums. Save yourself the ache of having to pay more in the future and take care of the expense from your pocket. The limit to which you can pay out of your pocket depends on your insurance package.
WHEN THE REPAIRS COST LESS THAN YOUR DEDUCTABLE
Don't rush to ask the insurance company to pay for the repairs before knowing how much repairs will cost. In the cases of minor problems, it would be better to pay out of your pocket than wait for the insurance process. If you are not sure how much it would cost you, you can call your insurance company and ask them.
A good example is when the deductible costs $500, and the repairs or replacement cost the same amount or less. It makes no sense to file a claim for $500 if you pay the same amount for your deductible.
WHENEVER YOU FILE A CLAIM, YOUR CLAIM RECORD GOES TO THE COMPREHENSIVE LOSS UNDERWRITING EXCHANGE (CLUE) DATABASE...
YOUR CLAIM RECORD
In the cases where you file several claims, your insurer may increase your premium rates since the risk is higher. Whenever you file a claim, especially for something you initiated, your claim record goes to the Comprehensive Loss Underwriting Exchange (CLUE) database. Appearing several times on this list may cause you to have a hard time getting affordable insurance coverage.
DO YOU HAVE AN EMERGENCY FUND
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