Did You Know Filing a Home Insurance Claim Affects Your Insurance Premium?

Advisors Insurance AgencyAll Blogs, Claims, General Insurance Tips, Home Insurance

insurance claims

Like most people, we buy insurance with the hope that we will never have to use it. However, when we do have to use it, it’s comforting to know that it’s offering you financial protection, but did you know the more often you make a claim, the more likely the cost of your insurance is going to go up? Yep. It’s true. There are many factors that affect the cost of your insurance like credit score and where you live, plus the amount of insurance claims you have filed.

Why does making an insurance claim affect your rate?

“I bought my insurance to use it, so why will my rate go up if I use it a lot?”
This is a great question and the truth is most insurance companies raise your premium when you file claims because statistics show that after you make a home insurance claim, you are more likely to make other claims. Because of this likelihood, insurance companies adjust your cost of coverage to make up for your potential risk.

How much will my insurance coverage increase?

The rate your insurance increases depends on a number of factors including where you live and what type of claim you make, for example whether it’s a home insurance claim, an auto insurance claim or a liability claim. On average in the United States annual premiums can increase up to nearly 10% because of frequent claims.

Can I prevent my insurance premiums from increasing?

One way to save money and prevent your insurance rate from increasing is to always think carefully whether or not you want to make a claim. Will making that claim be the best for you in the long run? In other words, only make a claim when it is necessary. Even asking or talking to an insurance company about a potential claim can result in a higher premium.

Insurance companies state that if you ask about a potential claim, it’s an indication that your home is at risk. Even if you never actually file a claim, insurance companies can raise your rate. Because of this, always be clear when speaking with an agent regarding whether you’re filing a formal claim or simply asking what type of damage is covered by your property.

What if insurance claims were made on my house before I owned it?

One fun fact in the insurance world is that any claims made on a home within the previous 7 years will have an affect on what you have to pay, even if you did not own the home when the claim was made. While this doesn’t seem completely fair, in the eyes of an insurer a home with multiple claims is likely to have more claims in the future.

Hint for future homeowners: When buying a home, always request a copy of the CLUE (Comprehensive Loss Underwriting Exchange (CLUE) report from the seller, this is a report that contains all insurance claims made in the last 7 years on the home or vehicle you’re interested in buying.

I’ve never made an insurance claim, what other reasons are there my insurance is so expensive?

There are many factors that contribute to the cost of your insurance. Because insurance varies from person-to-person, schedule an appointment to meet with your insurance agent and get an understanding of why your insurance costs the price it does. It never hurts to ask for more information, especially when it comes to the insurance that you are buying to protect yourself, your loved ones and your assets.