Insurance How-To: Tips for Saving Money While Safeguarding Your Possessions

iStock/Thinkstock(NEW YORK) — Insurance may be the best way to help you bounce back from life’s unwanted surprises, such as medical problems, car accidents and emergency home repairs, but filing a claim can be confusing.

How do you know when you should and should not file a claim? Insurance expert Bob Rusbuldt explained it all to ABC’s GMA Investigates.

First, when to file? Rusbuldt, the CEO of the Independent Insurance Agents and Brokers of America, says people should always file a claim when they’ve damaged someone else’s property.

“You may think you have a little minor incident…and three weeks later you’re sued for whiplash,” he said. “You have to file a claim to protect yourself…because of litigation.”

That’s exactly what George Brown says happened to him. He says he got into a fender bender and decided not to file a claim. He was later sued for $125,000.

“I just didn’t think that they would sue me for damages because there was no way that anyone was injured!” Brown told ABC News.

Next, Rusbuldt said, you should report any issue that could result in continuing damage. “Even if you think it’s a minor thing now, it could be much larger than you imagine,” he said.

But when is it better not to file? Don’t file if it’s the same incident over and over.

Rob Berger, the father of two teens, said his children got into multiple, yet minor, car accidents that didn’t involve other cars. He didn’t file any claims.

“I was concerned that if we report any claims, no matter how small, it would affect our premiums,” he said.

Experts say Berger was absolutely right.

“Sometimes insurance companies will non-renew you if you file so many claims where they’re losing money,” Rusbuldt said.

Also, you should not file a claim if the accident cost is close to your deductible. Just pay out of pocket.

“If you have a $500 deductible in your insurance policy and the claim is for $535…you may get the $35 now and you may get [an increase of] $120 in your premium,” Rusbuldt said.

If disaster does strike, reclaiming stability and safeguarding your life is key. “Nobody wants to use insurance, but it is critical that you have it,” Rusbuldt said.

Here are some extra money-saving insurance tips from Rusbuldt:

Don’t report a claim that you know is not covered. People tend to panic when the unexpected happens, according to Rusbuldt. Sometimes, they aren’t sure where to turn and want to try anything to recoup a loss, including filing a claim for coverage they don’t have. For instance, damage from flooding is not covered by a standard homeowners’ policy. Don’t submit a claim for that unless you have a separate flood policy. Don’t submit a $350 claim when you know your deductible is $1,000. Avoid the “let me just try it” mindset. When you clearly know you have no coverage, it won’t serve you well to “try to get something” for your accident. The claim will be noted on your record whether it is paid or not, and could adversely affect your insurability.

Be prompt and truthful. An insurance policy is a legal contract between insurer and insured that has certain conditional requirements that both parties must comply with, Rusbuldt says. For example, a typical auto policy says, in part, “We must be notified promptly of how, when and where the accident or loss happened. Notice should also include the names and addresses of any injured persons and of any witnesses.” As for homeowners’ coverage, a standard policy requires the policy owner to perform certain duties at the time of a claim, including reporting the incident as soon as is practical, and providing all reasonably available information and circumstances related to the claim. Remember that the insurance company has no duty to provide coverage if the insured party fails in these requirements.

Document, document, document. Use your smartphone to take photos of damage to your home or auto, accident scene, etc. Most policies covering damage to property require that you take reasonable steps to protect your property from further damage, according to Rusbuldt. Clear this with the adjuster or use your best judgment and keep receipts. Likewise, a homeowners’ policy usually covers your increased costs to live in a hotel or apartment while your damaged home is being repaired. Document all of those expenses, from restaurant receipts to laundry bills. In advance of a claim, do a video inventory of your possessions, including the contents of closets and drawers, and keep receipts of big ticket purchases. It pays to be meticulous with documentation. When in doubt, save it, photo it, record it.

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