What is Claim Free Protection
Have you ever considered to claim insurance but decided against it because you knew it would make your rates go up?
Have you ever claimed on your home insurance and then saw your premium fees increase the following year?
Did you think: This is absurd; what is the purpose of insurance if you cannot make a claim! Why am I being penalized for this?!
Well, you are absolutely not alone.
I presume most people would admit that motorists who get into accidents must pay more for insurance coverage than those who do not get into accidents. A similar principle pertains to home insurance – those who claim insurance pay higher than those who don't. The exception is that, unlike vehicular accidents where someone becomes at-fault, so damage to homes is often inevitable and not an immediate result of the homeowner's actions (or inaction). Still, premium fees rise.
The disappointment is not surprising, but there is a way to alleviate it. After a claim, insurers act. At times, your premium increases. At other times, your deductibles go up. Oftentimes, coverages are limited and restricted. These reasons discourage filing claims because the more claims an insurance company reimburses, the more premium it needs to charge to all its clients (even clients who have never filed any claims!). The more you claim for insurance, the more it gets pricey.
And while you can't prevent insurance companies from such, you can prevent them from eliminating your claims-free discount after you filed a claim if you have the appropriate coverage.
Over the past few years, most insurance companies have proposed various Claims Protection coverage that may be attached to the home, condominium, and tenant insurance policies for a comparably small price each year. Some people view this "insurance for your insurance" – you pay an additional fee to guard your premium fees, similar to paying a fee to protect your home.
The odd company has "built-in" claims-free discount protection to their home insurance coverage policies to protect their clients' discounts after their first claim, without charging for it. However, some companies need the coverage to be bought, usually for $25-$50 per year. You might find this information useful when you claim for insurance.
Like almost everything else, the way this coverage works differs from the company:
- It may be a "free" claim every three or five years;
- It may preserve your claims-free discount AND waive your deductible for a claim;
- It may be included with other enhancement features, such as the choice of taking a cash payout rather than restoring your home if it's ruined;
- It may only refer to one spot you insure (for example, if you have a house you dwell in and a condominium you rent out protected on the same policy, it may only apply to the house).
If you claim for insurance, most insurers would need you to have contributed at least three years without filing a claim before you can buy the Claims Free Protection. This means that for someone who hasn't had continuous insurance coverage for three or more years, the coverage is not offered, nor would it be possible for people who have filed a claim in the past three years. But for those who have been building a claims-free discount for many years, the coverage is usually available and always encouraged.
Regardless of these, your premium may still rise after having your claim for insurance. This may be due to general price increases or, depending on the claim's gravity, an additional surcharge. After you file a claim, the best thing you may do is discuss with your insurance broker to know how your policy will get affected and what to do next.
No claims discount - is it worth protecting yours?
Insurance companies offer clients the possibility of protecting their no claims discount. But will it be worth it?
Clients who drive claim-free can build up a discount on their car insurance. If you reach five years or more without claiming, that discount can turn into a significant saving.
Nevertheless, you could miss all that even if it's not your fault. For instance, if an uninsured driver happens to hit your car. So, does it merit spending extra to protect your discount?
- How do I get a discount? You can get a no claims discount for driving carefully and not involved in an accident where you claim for insurance. It also signifies that you haven't filed any claims to cover the charge of restoring or repairing your car after being vandalized or stolen.
- Is it worth protecting? It depends on your own circumstances, whether it is worth protecting your no-claims discount. If you have a no-claims discount for about five years, it will significantly cut your car insurance cost. You could lose all that in just one accident. Along with that, you could also lose your discount for being involved in an accident with an uninsured driver if you had to claim insurance. The chance to protect that loss might initially seem like a no-brainer. By protecting your no-claims discount, you'll be securing that discount. You'll continue to pay at a minimum on your premium fees, even if you've had an accident. Still, you might lose your discount if you encounter accidents in one year, though. The trade-off is that - you will have to pay an extra fee for the protection. It would not be easy to figure out whether purchasing protection leaves you better off than without it. If you get protection for your no-claims discount, this will add an extra cost to your premiums. But if you meet an accident without no-claims protection in place, you will lose your discount and will end up paying more in the future. The real issue is - which will cost you more in the long run. Sadly, there's no straightforward answer here. Looking into the details, it all depends on your driving records and the expense of protecting your no-claims discount. Use a comparison site to distinguish the difference in price for drivers with and without a no-claims discount. Then try attaching no-claims protection to the quote and comparing this over. It should give you some idea of the price variation.
- Premium fees rising regardless. It's also worth considering that your premium fees might grow each year irrespective of your driving. Have a note in your diary to buy around for a new policy right before your present one is up for renewal. Doing this could save you more money than a no-claims discount if you find the right provider.