You may have heard advice from your insurance agent: “If you ever have a burglary or your property is vandalized, please report this to me at once.”
But is this always good advice?
Southern California longtime reader “Anne” had that very question for me several hours after, “I was jolted awake at 3:30 in the morning by a phone call, from M&S Security, advising that the alarm had gone off at my office.”
After inspecting the office with their patrol officer, it was clear that nothing had been taken or disturbed, with the exception of the damage caused as the would-be burglar tried to get inside:
• The front door safety glass had been shattered in a failed effort to gain entrance.
• Screens were removed from windows.
• As an employee had forgotten to lock the deadbolt on a French door, the burglar succeeded in kicking it open which set off the alarm, sending him running and causing minor damage to the door frame and lock.
“It was property damage only — vandalism — and I immediately made a police report. Should I also inform my insurance agent?” she asked.
To notify or not to notify your insurance agent, that is the question and it has potentially significant consequences. I’ll have the answer in a moment, but for now, let’s assume the burglar was successful and things were stolen of considerable value which will be listed in an insurance claim.
Prepare for a loss
I spoke with Chula Vista State Farm Insurance agent Bernardo Vasquez, who is in a unique position when claims of this nature are made. While now an agent who sells insurance — and loves being his own boss — he explains that “My first 18 years were as an investigator, working all facets of claims, auto, fire, commercial, litigation, and catastrophes.”
Vasquez points out that claims are paid, “Based on proving what was there, what was lost. That is the greatest challenge a business or homeowner will face in what is an enormously stressful time. So, to minimize the emotional impact and be sure that you are able to list everything that was lost, be prepared before the event occurs.”
And how can you prepare for that potential loss?
“As no one can remember everything, by having an inventory of what you owned, what was in the office or home — before it is needed — this helps to assure that your claim will be correctly paid and will reduce the mental strain which is often significant.”
He explained that your inventory can be in digital or paper form — but kept off-premises. Use your cell phone to video and photograph the contents in your home or office.
“Keep your sales receipts, and credit card statements which show the purchase, and owner manuals. These things are so valuable — especially 20 or 30 years down the road — and it is a good idea to take photographs of these items with family or employees in the photos to establish authenticity. Show serial numbers of expensive items, like electronics and appliances, as well as their replacement cost.”
Red flags in the process
I can’t count the times when clients who had a fire or were burglarized felt they had won the Insurance Lottery, with visions of free money falling from the skies. Informed that padding the claim exposed them to felony prosecution, and that claims adjusters were anything but naive usually was a good wake-up call.
Some chose to ignore my warning, clearly having been standing behind the door when brains were handed out, and expected my office to become their co-conspirator to insurance fraud. They quickly became ex-clients.
“Our ears really perk-up when there are significant inconsistencies, such as things that do not seem to make sense, or something that does not match what was stated in a police report,” Vasquez underscores.
Of the many great points he left with me, one stands out:
“It would be foolish to file a claim that is less than your deductible, and not a good idea where the loss is fairly minimal or the cost to repair damage doesn’t amount to much. Claims can result in a premium increase, and you’ve got to consider that. For major losses, of course, that’s why you have insurance.”
When to keep quiet
“Just remember,” stated Albuquerque, New Mexico insurance agent “Sally,” “that I work for the company. Many agents will inform the carrier of your loss even if you do not file a claim and your rates will likely be raised! If it is relatively minor, and something you can easily handle out of your own pocket, do not ever notify your agent.”