How does Filing a Home Insurance Claim affect my Rate?

When people purchase their first home insurance policy, they’re often doing it under the assumption that they’ll put it to use whenever something goes awry in their house. However, after seeing how filing a claim can affect rates, the decision whether to put home insurance to use isn’t always so cut and dry. Even in cases where only a minor accident or problem has occurred, filing a home insurance claim can increase rates by more than 30%. If major repairs are necessary, you may even have to consider whether your insurance policy covers contractor accidents, which are more common than many people realize. Here’s a look at some of the major claim factors that can affect your rates:

Multiple claims

No matter how minor, the amount of home insurance claims you file will have a direct impact on your rates. Obviously, the more claims you make, the more likely your insurance rates will increase. Keep in mind that filing too many claims could even cause your insurance provider to permanently drop your coverage.

Who’s at Fault?

Fault also plays a role in deciding whether filing a claim will increase your rates. If you file a claim and the insurance provider discovers you actually caused the damage, you’ll likely see a rate hike. However, if the damage was caused by unavoidable circumstances, such as bad weather, your rates probably won’t change.

Types of Claims

In the eyes of your home insurance company, some claims are worse than others. While certain claims may not affect your rates at all, others could have serious ramifications and even get your coverage dropped. For instance, bodily injury or dog bite claims are generally considered worse than a claim for a few broken windows during a storm.

Should I File a Claim?

Of course, the final decision on whether or not to actually file a claim comes down to each individual and their unique situation, but there are some things to take into consideration. Looking at the major claim factors listed above, you should be able to at least make an intelligent guess as to whether your rates will go up. Ask yourself these questions:

• Have you already filed multiple claims, especially in the last couple years?
• Are you responsible for the current damage?
• Could this be a very costly claim for your insurance provider?

If you could answer yes to any of these questions, then you probably run the risk of increasing your rates by filing a claim. Is filing the claim worth risking your rates? Since the damage may be too expensive to repair on your own, filing the claim may be your only option. You may want to explore other options if you think it’s something that you can pay for out of pocket or even wait a couple months to deal with.