Do auto clients ask for trouble by hiking deductibles?

During the recent renewal cycle, many personal auto customers opted to increase their deductibles to reduce their annual premiums.

Now, those decisions are leading customers who’ve been in accidents to delay pursuing claims because they don’t have enough cash on hand to cover those higher deductibles.

“I’m having some uncomfortable conversations with our insureds who can’t afford the deductible,” said Jesica Ryzynski, a claims specialist with Mitch Insurance.

“It’s difficult for people to admit that. It’s embarrassing for people. We need to approach these situations with as much empathy as possible because we don’t know how much someone is struggling.”

In most cases, clients delay rather than forgo needed repairs. And clients claiming for vehicle damage arising from collisions that don’t involve injuries have one year from the date of a loss to get everything done, Ryzynski said.

If the client can’t pay their deductible, regardless of whether the vehicle is or isn’t still drivable, the claim gets closed. “Then the adjuster says, ‘If you’re able to gather your deductible, come back to us before the one-year mark and we’ll proceed,’” she told CU. “When the client calls and says, ‘I need to reopen my claim, I have the money for my deductible,’ usually the adjuster that was handling it initially or somebody [else] at the company can reopen the claim for them.”

Claims delays

Ryzynski’s also had clients tell her they’ve had an accident but won’t be opening a claim immediately because they can’t afford the deductible.

“There are only specific accidents where people can get away with delaying reporting. If they’ve collided with another person, they have to provide their insurance information in order for that other person’s insurance to be able to settle their claim appropriately,” she said.

“Or if the person damaged property – say, they’ve knocked into a telephone pole or driven into someone’s fence – they have to report that claim because they’ve done damage to somebody else’s property. And the same is true if there’s an injury.”

Some claims, though, can come out of the woodwork. In some situations, for example, an insured may have done something like back into a guardrail or a cement pillar in a parking lot.

“They [know] they’re going to be subject to their deductible and we won’t hear about that sometimes for a couple of months,” Ryzynski said. “I’ve had people drive over a curb and damage the underside of their vehicle. And three months later, I’m getting the call, “Yeah, I’ve done this.’ But it’s going to be single-vehicle accidents and not anything that involves another party.”

Timing is everything

Non-financial circumstances can also lead to tight claims timelines.

“I had one recently where the timing was very tight. The client had to leave the country to help a sick relative. It wasn’t specific to the deductible, [they just] had no time to deal with the car,” Ryzynski said.

“They returned within a week of the one-year date. The client did have to resubmit the estimate because it was so long ago, but since they used one of [the insurer’s] preferred shops, the shop quickly updated the estimate and no additional work was required on the client’s end.”

Feature image by iStock.com/GummyBone