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When you should file a renter’s insurance claim—and when you shouldn’t

You'll need to weigh the cost and the benefits of filing a claim. 

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Do you rent in NYC? And do you have renter’s insurance? If you said yes to both, that's great! According to the Insurance Information Institute less than half of Americans do. Now for some not-so-great news: If you have reason to file a claim, you need to really consider if it's worthwhile to do so.

You may be wondering, “Isn’t the reason I pay a monthly premium so I can replace or repair things when I need to?” Well, yes. And no.

While renter’s insurance is a wonderful thing to have, saving the day—and you, potentially thousands of dollars—in the event of theft, significant damage to your apartment, loss of a treasured belonging, and more, you need to be aware that filing a claim can cause an increase in your insurance costs.

You can, of course, file a claim for anything your policy covers.  But that’s not always the smartest move. (FYI: these things aren't covered by renter's insurance.)

Reason #1 to skip a claim: It doesn’t make sense financially

If the amount you’d be filing for is not that significant—a figure that is admittedly, relative—you risk triggering a slight uptick in your insurance cost.

“When you have pretty certain knowledge that a claim will be small, it often makes sense not to file. Of course, this depends on your finances, but to file a claim to get back $250 or so is usually not worth it,” says Jeffrey Schneider of Gotham Brokerage, an insurance firm in New York City (and a Brick Underground sponsor) “With even a small claim you can see a small rate increase or, to put it another way, lose a claim free discount.”

Therefore, the safe choice would be to pass on filing, to both maintain a claim-free account, and save on your overall rate.

Reason #2 to skip a claim: Something worse may happen

This doesn’t mean that you should never file a claim. Schneider says one claim in a three-year period is reasonable, as long as it doesn’t raise a flag that you are not taking adequate care of your residence.

But people get insurance just in case and because accidents happen—and one might happen at your apartment.

“One of the issues with filing a small claim is that something bigger can be coming down the pike,” he says. “While one claim in a few years years will not jeopardize your coverage, a second larger claim that you have to file might.”

Schneider himself knows this all too well. “After going many years without a claim, I filed for a small jewelry loss...and then a week later we had a major theft,” he says.

When you probably shouldn’t wait

One instance when it’s best to err on the side of caution (and file), is when an accident or issue at your apartment may be responsible for damage in someone else’s.

“If you have damaged your downstairs neighbors' apartments, for example, you have to file,” says Schneider. “The extent of the damage might not be apparent for weeks. Sometimes ‘minor’ floor buckling grows to require that the entire floor be replaced. If someone is away on extended vacation, you might find out in months that you have ruined their Warhol lithograph...And a delay in reporting these claims can cause coverage issues.”