If you pay good money for something, you should use it. Whether it’s a soda, a new laptop, or that juicer/blender stored in the back of your cabinets, it’s a waste of money if you let it sit untouched. Many people feel that way about their insurance coverage, especially business insurance. It was purchased to protect you and your company and when something goes wrong, you need to file a claim.

Sometimes that’s true, and sometimes it isn’t. There can be consequences for filing claims that don’t make good business sense. Take a look at the times you should and shouldn’t file an insurance claim and save yourself future hassles.

When You Should File an Insurance Claim

Not every problem warrants a filed claim, but some do. You should file a claim if:

  • You need to make your business whole again after a covered loss.
  • The claim will keep you and your business afloat until you’re open again.
  • Liability claims should always be filed as soon as possible.
  • If your provider doesn’t pay out on claims until your deductible is met, it may be better to file the claim that helps you meet your deductible so that a claim later in the year isn’t as costly.

When You Shouldn’t File an Insurance Claim

There are times when it may make more financial sense to take care of a problem yourself instead of filing a claim.

  • Your claim may not be more than your deductible, so you’ll still have to pay for it yourself anyway.
  • Your claim history follows you for up to seven years. Too many claims could mean you’re paying higher premiums no matter which insurance company you use.
  • If your claim involves water damage, you might be dropped from your provider because water damage often leads to mold.
  • If a maintenance issue caused your claim, the insurer may reject it, but the claim could still sit on your record.

What to Do When You File a Claim

Once you’ve figured out that you really do need to file a claim, there are a few things you can do to make sure the process goes smoothly.

  • Look over your policy to make sure the event is covered.
  • Call your insurance agent right away.
  • Hold off on making permanent repairs until your insurance company says that it’s okay. Definitely make temporary repairs to make sure damage doesn’t increase.
  • Get at least two bids on the cost to repair or replace whatever was damaged.
  • If you’re filing a business interruption claim, make sure you have records showing your income before the interruption and after, as well as any additional expenses you’ve incurred as a result of the business interruption.

Business insurance is there to protect you and your company when problems occur, but using it wisely will ensure you don’t have to pay more than is absolutely necessary.