Every insurance agent has had this conversation with a client at one time or another. It goes a little something like this:
Client- “I want to submit a claim”.
Agent- “Mr. Mwangi, you’ve already submitted 2 claims in the past year. You have a Ksh. 5000 deductible and your repair estimate is for Ksh.6000. You may want to pay this one out of your pocket instead of filing a claim with the insurance company”
Client- “But isn’t that what insurance is for? Why else do I pay premiums? It is so that the insurance company can pay for my claims. All of them”.
In an ideal world, an agent would advise their client to file a claim every time an insured event under their policy occurs. Unfortunately, every agent has learned over the years that client’s policies are canceled due to claim activity.
The truth of the matter is that insurance companies prefer clients who make minimal claims and frown upon policy holders fond of filing claims for every little thing.
There is a major problem here because every year a policy holder pays premiums, he/she expects that all covered claims should be paid for.
But trust us, submitting too many claims will result in a negative action. Insurance companies notice this frequency and call you on it. If you’re lucky, they may only require you to raise your deductible. If you’re not- the cancellation notice will come next.
It’s time we move away from this line of thinking
Insurance was intended to help you get back on your feet. Most people can afford to pay for the small stuff for example, a scratch on your bumper or missing side mirror. It’s the major things they can’t handle like having your car written off or your house burning down in flames.
Insurance is NOT meant to pay for the small stuff. The tendency to file a claim for ksh.1200 when your deducible is Ksh.1000 should be discouraged. The insurance company refers to these kind of claims as “nuisance claims”.
So the next time your agent advises you against filing your claim, do not take your frustration out on them. They are only trying to help you in the long run.
Now we are not saying that you should never file in a claim. But every client needs to make an educated decision when it comes to submitting claims.
Here is what we would advise to clients:
First, insurance clients need to understand that unless the insurance changes their stand on it, we should simply “not claim the small stuff”. There are consequences of submitting too many claims in too short a time period. And especially the dangers of submitting too many small claims.
Second, take the biggest deductible amount you can afford in case a covered item occurs. This will in turn allow you to pay lower premiums than if you had not taken the deductible. For example, when asked to choose between policy A) 4,000 KSh premium, no deductible and a Ksh.250 rebate or policy B) 3,500 KSh premium, Ksh.500 deductible and no rebate, it is advisable to take option B.