If You File a Homeowner’s Insurance Claim, Will Your Rates Go Up?

If you're getting ready to file a homeowner's insurance claim, you should take a moment to assess its likely impact on your out-year premium payments. According to the latest available statistics, the average American homeowner files just one homeowner's insurance claim per decade. If you've lived in your house for just a few years, you might be new to the claims-filing process. Although it's likely that you've filed an auto insurance claim at some point in the past, the procedures that govern the filing of homeowner's insurance claims are far different. The pricing policies to which most homeowner's insurance companies adhere are also far different than those to which most auto insurers adhere. As such, your experience with your auto provider's claims department is likely to be of limited value in your current situation.

First, you'll need to adjust your household's budget to reflect your homeowner's insurance claim. If the claim that you're about to file is your first-ever homeowner's insurance claim, it's possible that your provider won't increase your premiums in its wake. However, it's far more likely that your annual rates will increase by a small but noticeable amount. The reason for this is simple: Most homeowner's insurance companies offer a so-called "claims-free" discount that rewards homeowners who have yet to file a claim. This is a one-time discount that can't be reinstated. Once you've filed a claim, you'll lose your discount. Depending upon the policies of your provider, the loss of this discount could cause your premiums to rise by between 5 and 20 percent.

Several factors will determine the exact size of your rate increase. These might include the amount of time that you've been claims-free, the total cost of your current claim, the amount of time that you've had your current policy, and the bylaws of your specific homeowner's insurance company.

If you've been claims-free for more than a decade, chances are good that your rate increase will be relatively small. Depending upon the value of your claim, your premiums might rise by as little as 10 percent. If you've filed multiple claims during the past decade, chances are good that your premiums will increase by more than 25 percent. In order to afford this increase, you might be forced to boost your policy's deductible or drop certain endorsements. If you have more than four claims within the past decade, this new incident might even cause your insurer to cancel your policy.

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