Having homeowners insurance is great; if something happens to your property that falls under your homeowners insurance policy coverage, all you have to do is file a claim to have it repaired. There is a downside to filing homeowner’s insurance claims, though, that it’s important to be aware of. Namely, the fact that once you start filing claims, your insurance premiums are likely to increase down the road. The nationwide average for insurance premium increases after a policyholder files a claim is 9% – that means you can expect to have to pay that much more for your insurance after you file one single, solitary claim. The more claims you file, the more your insurance rate will subsequently increase. The reason for that is because homeowners insurance companies know that, statistically, an individual is more likely to file an insurance claim once they file their first. Since that policyholder poses a greater amount of risk, insurance companies will need to charge more to insure them.
The best way to make sure your insurance premiums don’t skyrocket is to only file an insurance claim when you absolutely must. For example, if a pipe bursts and you end up with extensive water damage throughout the home, filing a claim with your homeowners insurance company is probably a good idea. However, if a pipe bursts and there’s minimal damage, it might be cheaper in the long run to either fix it yourself or call a contractor to do the repairs.
Insurance companies are adept at paying attention to detail and knowing as much as they can about a person’s claim history before selling a policy. Insurers are able to consult shared databases to track a person’s claim history, so switching carriers to avoid higher premiums probably won’t work. Additionally, insurers will look at the previous homeowners’ claims for up to 7 years prior for underwriting purposes and, if they find that claims were filed during the prior 3 years, your insurance premium will be higher.
It may seem a bit ironic that several small, frivolous claims can easily affect your premiums more than one large one, but that’s the way it works in the insurance world.