In today’s world, it’s easy to think of insurance as a subscription service:
“I pay for it, so why not use it?” But that mindset is creating ripple effects in the industry—and it could affect your rates, your renewals, and your future insurability. Let’s break down what insurance is really for, and how to use it wisely.
Insurance Is Emergency Protection—Not Routine Maintenance
Insurance is designed to help you recover from unmanageable financial loss—events that would otherwise devastate you. Of course, there are coverages for minor issues, but that’s not what we’re talking about here.
Think:
– Major property damage
– Liability lawsuits
– Accidents with high repair or medical costs
It is not designed for:
– Small roof repairs
– Cosmetic auto damage
– Everyday “fix-it” expenses
Using insurance too frequently for minor issues can lead to non-renewals, rate increases, or even loss of coverage.
How Claims Impact Your Future Rates
Every claim you file is logged into databases like CLUE (Comprehensive Loss Underwriting Exchange).
Carriers use this history to determine:
– If you’re insurable
– How much they should charge you
– Whether you’re likely to be a “high risk” customer
Frequent claims—even if they’re valid—can signal trouble.
Common Myths That Get People in Trouble
– “It was an act of God—they can’t raise my rates!” Yes, they can. Risk is still risk.
– “If I have coverage for it, I should use it.” Not always. Coverage doesn’t equal recommendation.
– “It’s my money—I’m entitled to use it.” Insurance is pooled risk. Overuse strains the system—for everyone.
So When Should You Use Insurance?
Use it when:
– The damage exceeds your deductible and your emergency savings
– The incident affects your safety, structure, or long-term finances
– Your agent advises that a claim makes sense strategically
Work With an Independent Agent to Get It Right
An independent insurance agent helps you:
– Understand which coverages are “major vs. minor”
– Determine when to file a claim
– Protect your future insurability
– Navigate rate changes and renewals