Insurance Claim: to file or not?

[Melissa Bovee]

Hello all. I’ve taken over management of a commercial shopping center (from my dad who passed away) over the last 2 years. Steep learning curve. This week we had a water line rupture. Several of our tenants had to close for the day while we shut off water and dug up the parking lot to find and repair the break.

Looks like the cost will be 9-10k. My insurance deductible is only 1000, so my initial thought is to use the policy. However, in the back of my mind I’m wondering if that would be a mistake. My policy is very expensive (per my property manager who is comparing it to a few other centers she manages). This last cycle we looked for alternatives, but the agent she has worked with said he didn’t find anyone who would insure it due to the tenant mix and the lack of a sprinkler system. My family has used travelers forever (20+ yrs). The only claim was in 2009 but it was a big fire impacting 2-3 of the ~10 units and the payout was ~600k.

My worry is that if I use the policy for this relatively minor incident, do my already high rates go up? Do I risk getting dropped in the next cycle (with few or no alternatives)? Is the 9k payout just not worth it? Not sure if this is a factor, but our free cash flow is typically 5-15k per month after all expenses and mortgage payment. 

Thanks in advance for your help!