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What happens to home insurance after a claim
While having insurance protection on your property is vital, it works like a double-edged sword — the more you involve your insurance company, the more expensive your rate will be for the foreseeable future. It is crucial to understand which situations are worth filing homeowners claims for, and which aren't.
If you must file a claim, you should brace yourself for an inevitable rate increase. How much your premium will rise will depend on a number of factors. Continue reading to see estimates on how much you can expect to pay for homeowners insurance after a claim.
How much does homeowners insurance increase after a claim?
The data below shows national average premium increases for a variety of claim types. Keep in mind your own rate increase relies heavily on the individual circumstances of your claim and your insurance provider.
AVERAGE HOME INSURANCE RATES AFTER A CLAIM
|Wind, Weather or Hail Claims||$1,614||+9%|
|Water Damage Claim||$1,757||+19%|
|Average Annual Rate||% Increase|
What factors go into a rate increase?
Every insurance company will calculate this differently, but there are four primary factors that will affect how much your insurance premium will increase:
- Type of claim: Some events or perils can cause more damage than others.
- Claim payout: This is directly correlated to the extent of the damage. The more expensive the claim, the more your insurer will charge you in the future.
- Location: Home insurance rates vary depending on where you live. In addition, if your neighbors have made past claims, insurance companies can use this fact as a bellwether for any future events that could lead to you filing a claim.
- Claims history: Insurance companies can also look into your personal claims history to determine how much to charge you going forward.
Why do premiums go up after a home insurance claim?
Having one too many claims not only increases your homeowners insurance premium but risks your insurance policy getting non-renewed or canceled by the insurance company because it now views you and your home as a liability.
By raising your homeowners insurance rate, insurers are accounting for the increased risk of providing you with insurance coverage. Years of data and statistics inform insurance companies that those who have filed claims in the past are more likely to file another claim sometime in the future.
While insurance companies are in the business of protecting you and your home from certain perils and hazards, insurers are, above all, profit-motivated; continuously paying out claims — especially a high number of them all at once after catastrophic events like natural disasters — directly influences its bottom line and financial stability. Charging a premium increase after settling a claim is the insurance company’s way of anticipating more losses.
How long will a claim affect my homeowners insurance?
Home insurance claims typically stay on your record for five to seven years. The database that keeps track of property claims is called the Comprehensive Loss Underwriting Exchange Report.
Homeowners can request a property’s CLUE report to see its history of claims, including information on loss dates, claim types and settlement amounts.
Tips on how to save money on home insurance
If you’re facing the prospect of paying more for homeowners coverage after a claim, consider these expert tips on how to lower your rate.
Dispute inaccurate information
Your home’s CLUE report is one of the things insurance companies analyze when calculating how much you should pay for coverage. There is a possibility that even if you didn’t follow through on filing the claim but alerted your insurance company of the damage anyway, that it was recorded as a zero-dollar claim. Despite not being settled and paid out, having this on your claims history could hurt you in the future and result in higher premiums for years.
CLUE reports are subject to Federal Fair Credit Reporting Act (FCRA) guidelines. This means that LexisNexis — the entity responsible for CLUE — must work with insurance companies to reinvestigate claims if inaccuracies are reported. While this can be time-consuming, it could be worth the effort to ensure you get the best value for homeowners insurance coverage going forward.
Opt for a higher deductible
A common trick to lower your premium is to choose a higher deductible. This is because a homeowner with a higher deductible has a greater financial obligation in the event of a claim, which could also deter them from filing in the first place. However, homeowners who choose a high deductible to save on their home insurance premium should ensure they can come up with the funds should something catastrophic happen to their property. Learn more about deductibles for home insurance.
Look into bundling multiple policies
Bundling discounts tend to be the steepest among all of the discounts insurance companies can offer — most of which are quite small. Rather than having home insurance with one insurer and auto insurance with another, it would be less of a hassle and save you more money if you bundle your home and car insurance with a single insurance company.
Embark on home improvements and upgrades
Deferring important repairs not only hurts your home value but raises questions from your insurance company if a claim could have been avoided had you kept up with maintenance. For example, if your roof has long surpassed its estimated end-of-life, and part of it caves in after a storm, your insurance provider could deny your claim based on the prior bad condition of the roof.
Many insurance companies offer discounts or lower rates on homes that have upgraded the roof, electrical, plumbing and heating systems. Home security and fire prevention systems can also secure you a more affordable premium.
|Fire Alarm Central Station||$49|
|Burglar Alarm Central Station||$37|
|Annual $ Savings|
Compare insurance options and make the switch
Some insurance companies are just more expensive than others, no matter how good of a client you are. While it may be easier to just renew your policy, shopping around at the end of every policy period to find the best cheap home insurance is a guaranteed method in yielding the most savings.
If you’re finding your higher premium too expensive to maintain, switching companies could pay off by providing better value with superior coverage. Comparing quotes from numerous insurance providers has never been simpler — see how much you can save quickly and easily.
Find the right policy in only a few minutes.
About The Zebra
The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.
The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
The Zebra’s insurance content is not subject to review or alteration by insurance companies or partners.
The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.
The auto insurance rates published on The Zebra’s pages are based on a comprehensive analysis of car insurance pricing data, evaluating more than 83 million insurance rates from across the United States.