It’s possible that filing a claim can result in a rise in your home insurance premiums, but it all depends on the nature, cost, and frequency of your prior claims.
We’ve contacted our expert at Legal Grit in South Florida, a homeowners insurance lawyer, for some advice on this matter.
In line with the Insurance Information Institute (I.I.I), the typical U.S. homeowner’s insurance premium is $1,249. Insurance companies calculate your premiums by assessing your risk and likelihood of making a claim. They will then raise your premiums because they perceive that you are considerably more likely to submit another claim after making one.
According to statistics from Insurance.com, home insurance premiums are determined based on the possibility that a claim will be filed; you may anticipate a rate rise of 16-29% for a single claim and up to a 60% rate hike for a second claim.
Your rates will rise depending on variables like your claim type, claim history, and amount.
Furthermore, uncontrollable occurrences like persistent inclement weather and localized thefts may raise rates.
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How much will homeowners insurance increase after a claim?
The kind of homeowners insurance claims you’re making will determine everything. Generally, a first claim will probably increase by 7-10%.
This increase is because insurance companies predict how likely you are to submit future claims based on your past claims history. However, not all claims will result in such a rate rise.
How to keep your homeowners’ insurance rate low
Look around to locate the best deal if you’re shopping for a new house. Additionally, if you currently own a house and wish to minimize your premium, the following advice might be useful to you:
Increase your deductible
It may seem like a decent idea to reduce your home’s insurance costs by having a low deductible of $500 or $1,000. After all, the less the deductible, the less out-of-pocket expense you’ll incur in a covered loss.
However, if you can afford the increased deductible in the case of a loss, raising your deductible might decrease your premium. Raising your deductible might result in a lower monthly insurance cost if you have enough cash to pay for small repairs.
Bundle home and car policies
When you get house and vehicle insurance from the same company, you can receive discounts on both plans. Bundling both policies with an insurer may assist you in reducing the cost of the higher premium if your homeowners’ insurance goes up after making a claim.
Install safety and security devices
Major carriers provide discounts for houses with safety features like sprinkler systems, smoke detectors, and fire alarms. A security system installation discount may also be available, and many insurers are providing discounted rates for houses with smart home technology.
Maintain your credit
Insurance providers can occasionally consider your credit-based insurance rating when calculating your premium, depending on the state. Homeowners’ insurance premiums may be higher for policyholders with bad credit in some areas. A better credit-based insurance score might result in a reduced rate if you maintain your credit score.
Which claims are more likely to cause a rate increase?
All claims are not equal; certain losses or damages are more likely to recur than others.
Following non-weather related claims, insurance firms are more likely to raise rates or target policies for cancellation or nonrenewal, including:
- Water damage
- Dog bites or other liability claims
Any of these hazards might result in a premium rise if a claim is made. It may even lead to a nonrenewal if it’s your second or third claim in five years.
When to file a claim
You should submit a claim if the repair cost exceeds your deductible. So, if your deductible is $1,000 and a contractor quotes you $10,000 to replace your roof after a windstorm, paying the deductible makes sense.
You should also submit a claim for severe harm or a total loss.
When not to file a claim
You may decide not to submit a claim to your insurance provider. An illustration would be when the expense of replacement or repair is almost equal to your deductible. Then it could be preferable to pay for the damage yourself rather than run the risk of raising your insurance rates.
Another situation where you could decide not to make a claim is if you’ve filed several claims in the last few years. Remember that your premiums will rise each time you make a claim.
For instance, your premiums may increase by 29% from the starting point following a single claim fire occurrence. Your premiums may climb by 60% following two claims. Multiple claims may even make your insurer decide not to renew your insurance because they judge you as too risky.
Because claims remain on your record for five years, think about whether the total cost of the premium increases over that time is justified by the level of protection you would be receiving.