To claim or not to claim

I’m often told that businesses have been advised not to make insurance claims because premiums will go up. This is certainly true in some cases yet I feel that analysing trends is the most appropriate way to work out if an incident will lead to a premium increase.

Insurance companies want to make profits. If you have been with an insurance company for 3 years and made two small claims you are still profitable. If the claims were for similar reasons the insurance company would rather nip the trend in the bud than increase premium. Small incidents can lead to larger losses if lessons are not learned.

There are complicated calculations to be done by the underwriters who work for insurance companies because premiums are sometimes broken into sections. If a series of claims are for flood, that part of the premium may have moved into the red and an adjustment can be made to the rate or the excess.

What’s best for both parties is to eradicate the incidents so organisations that are proactive will secure the most competitive rates for the long term. Premium stability is the mark of good rapport between customer, adviser and insurer.

A new insurance company means new policies, terms, conditions, exclusions and warranties. Chopping and changing to improve premiums can sometimes mean your new insurance company takes a hit in the first year. Terms are likely to deteriorate at renewal.


Discuss every incident especially “near misses” with your adviser. They may have experience of risk prevention strategies which can prevent recurrence. These can prevent minor problems leading to preventable losses which are usually followed by increased costs.

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