Home and auto insurers are great about offering add-ons to your policy that seem in theory like great conveniences at a great price.
But using these seemingly benign “benefits” could marginalize you in the insurance marketplace and result in jacked-up rates!
Never use these things your insurer offers you
Some auto insurers that offer roadside assistance treat your use of it as an at-fault claim and put that through on your C.L.U.E. report.
What’s a C.L.U.E. report? C.L.U.E. stands for Comprehensive Loss Underwriting Exchange. It’s a shared database insurance companies report to when you make a claim. If you have too many claims on your C.L.U.E. report, that could make you radioactive to other insurers for three years.
Why would insurers want to do this? Because it limits your ability to jump ship when they want to raise your insurance rates!
“It’s the Wild West with no rules on what insurers can decide to report on your C.L.U.E. report,” money expert Clark Howard says. “And you have no right of appeal either.”
So here’s the # 1 rule about roadside assistance: Never get it from your own insurer. Get it from AAA or elsewhere.
Cell phone insurance
Your home insurance policy may have coverage for electronics, including your cell phone, in case they get fried by a sudden electrical surge or you somehow break them.
But using this insurance can be too high voltage for your wallet.
Insurers are likely to report the use of cell phone insurance on your C.L.U.E. report as a claim. That will hamper you when you go to shop with other insurers. And, your own insurer may use that “claim” as a justification for hiking your premium or dropping your home insurance coverage altogether!
Maybe you’re tempted to get cell phone insurance through your wireless carrier instead. That option is preferable to getting it through your home insurer — though there is a more affordable way to get better coverage.
If you really want to save money, check out these cheaper alternatives to cell insurance through your carrier.
Calling to ask if something is covered may be recorded as a claim!
Some insurers are now also treating an inquiry — such as where you call in and ask a simple question about if some event in your life is covered — as something they slap on your C.L.U.E. report!
Let’s say you have some water damage in your home and you’re thinking about paying for it out of pocket instead of filing a claim. But you want to call your insurer up to see what the process is to have an adjuster out — just in case the damage proves to be more extensive than you previously thought.
Mind you, you never actually do have the adjuster out or file a claim. Even so, your insurance company could still list it as a claim on your C.L.U.E. report!
Insurers are increasingly frustrated by comparison shoppers who have allegiances that can shift easily based on heavy TV advertising. So they’re trying to hit you with a mark of shame to make their competitors turn up their noses at you.
Doing sneaky, tricky things like putting a phone call as a claim — or the use of roadside assistance as a claim — shouldn’t be allowed. But LexisNexis, which is the company that maintains the C.L.U.E. report database has no standards about this stuff, so insurers can put through anything they want.
Here’s the best solution of all…Raise your deductible!
When it comes to making small but legitimate claims, don’t do it! What you should do instead is take the highest deductible that the insurer or your auto financier will allow and that you can afford. Typically that is a $1,000 deductible.
You never want to make a claim on auto insurance for something small — like a cracked windshield on a car — because the consequences are so ugly. The insurer can surcharge you for a number of years; eliminate the discounts you would otherwise qualify for; or put a black mark on your C.L.U.E. report, which effectively limits your ability to shop with the competition for 36 months.
You need to think of home and auto insurance as going back to its original purpose: For catastrophic circumstances only!
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