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Does Homeowners Insurance Go Up After a Claim? Tips to Protect Your Rates

Does Homeowners Insurance Go Up After a Claim?

Yes, filing a claim may increase your homeowners insurance premiums if…

  • You live in an area prone to natural disasters like wildfires.
  • You live in an area highly susceptible to crime. 
  • You’ve filed multiple claims within the past few years. 
  • You’ve filed a liability claim.

Depending on factors such as your location, personal claims history, the type of claim, and the severity of the damage, your insurance premiums could increase anywhere from 10% to 40% per claim. 

What Is An Insurance Claim?

A homeowners insurance claim is a request to your insurer to financially reimburse you for damage to your home caused by a covered peril, such as fire, theft, vandalism, or natural disaster.

The process of filing an insurance claim can vary slightly depending on the insurer. Still, it generally involves filling out a claims form online to document the damage to your home and meeting with an adjuster who will inspect your home to determine the settlement amount.

Unlike other types of insurance claims like auto insurance claims, estimating the costs of repairing or rebuilding a home can be more complex and require a lengthier process. 

How Do Homeowners Insurance Rate Increases Work?

If insurers believe you’re likely to file claims in the near future, they may raise your premiums to compensate for another potential payout. Here’s how homeowners insurance rate increases work. 

In What Situations Will Your Homeowners Insurance Rate Go Up?

  • Frequent Claims: If you frequently file claims for damages or losses, even small ones, you’ll most likely see your premiums increase since insurance companies view this as an indicator of high risk.
  • Liability Claims: If someone is injured on your property and you file a liability claim, your premiums could go up since these types of claims can result in expensive lawsuits.
  • Large Claim Payouts: Generally, the more expensive the claim, the more your insurer will charge you in the future since they may view you and your home as a liability. 
  • Non Weather Related Claims: Claims like water damage, fire, theft, or vandalism could trigger a rate increase, especially if you’ve filed a similar claim within the past few years. 

When Should You File a Claim With Your Homeowners Insurance?

While filing a claim could increase your premiums, there are some scenarios where it’ll make financial sense to file an insurance claim and receive compensation for the damage:

  • Covered events like wildfires or hurricanes cause significant destruction to your property. 
  • When the loss estimate of the damage is more than your deductible amount. 
  • For example, when an add-on covers the damage incurred, it may make sense to file a claim if your diamond necklace was stolen from your home, but you have jewelry coverage.

When Should Not File a Claim With Your Homeowners Insurance?

Frequent claims could lead to increased premiums or even policy cancellation in some cases. Here’s when you should avoid filing a claim with your insurer to keep your insurance costs at an affordable level:     

  • If the damage is minor and can be easily repaired.
  • If the repair cost for the damage is lower than your deductible amount. 
  • If non-covered perils, such as maintenance-related issues or normal wear and tear, caused the damage. 
  • You already have several recent claims. 

How Much Do Rates Increase After Filing a Claim?

Filing an insurance claim can trigger a rate increase. Typically, homeowners insurance rates can rise anywhere from 10% to 40% after a single claim. However, these percentages can fluctuate based on factors such as the type of the claim, the amount claimed, and your location. For example, if you live in an area with high rates of violent crime, filing a home insurance claim for break-ins and theft can result in a much steeper rate increase than if you lived in a safe neighborhood. 

Which Situations Do Not Increase Rates?

Insurance companies are regulated at a state level by consumer protection laws, and here are some scenarios where they’re prohibited from raising premiums:

  • When you’ve only inquired about a claim and did not submit one.
  • When your claim is denied and does not result in a payout.
  • When you’ve only filed a single claim. 
  • When you file a claim due to natural disaster damage.

Variables That Effect Rate Increases

Many variables can affect your homeowners insurance premiums, including the following:

Severity of the Claim
Types of Claim
How It Affects Rate Increases
The more susceptible your property location is to the covered perils, the higher your rate increases
The more severe the claim, the higher the rate increases
Non-weather related or easily preventable types of claims generally result in higher rate increases
The poorer the condition of your roof, the higher your rate could increase
While one claim related to hail damage will not typically increase your premiums, multiple claims could still raise your rates 

Does Location Affect Rate Increases?

Yes. The location of your property can affect your homeowners insurance rate increases, as some areas are more susceptible to natural disasters like hurricanes or crime.

For example, if your home is located in regions prone to wildfires, like California, Texas, or Arizona, you could be more likely to experience larger rate increases after filing a claim since insurers may view you as someone with higher risk. 

Does The Severity of the Claim Affect Rate Increases?

Yes. In general, more severe claims, such as major accidents or extensive property damage, are likely to result in higher rate increases compared to smaller, less severe claims. For example, if a devastating hurricane causes extensive damage in your community, your insurance rate could increase more substantially than it would if you filed a property damage claim because a fallen tree branch cracks your siding. 

How Do Different Types of Claims Affect Rate Increases?

Your insurance premium may be more likely to increase if you file a liability claim compared to a property damage claim since there’s a higher ceiling for expenses with the former. Liability claims could incur hefty legal fees and court settlements if there’s a lawsuit, which is an added risk for the insurer. And if you’re sued for an amount greater than your assets’ values, your insurer could suffer an even greater loss. 

Non weather related or easily preventable claims are also more likely to result in rate increases. 

How Do Roofs Affect Insurance Costs?

Your roof’s condition can significantly impact insurance costs, directly affecting the risk of damage and frequency of claims. Generally, the better condition your roof is in, the lower your homeowners insurance rate. On the other hand, if you have an older roof in poor condition, your insurer may raise your premiums to make up for the higher risk of you filing a claim. And if your roof is older than two decades, some insurance companies may even require a thorough inspection before providing coverage.

How Does Hail Affect Insurance Costs?

Since you cannot control the weather, most insurers will not hike your rate after you file a claim. For example, some states like Texas prohibit insurance companies from raising your premiums if you’ve only filed one claim related to hail damage. However, in some cases, your premiums could increase if you file multiple claims within a short timeframe. Check with your insurer for more details on how hail could affect your insurance costs. 

How Long Does a Claim Stay On Your Record?

A homeowners insurance claim generally remains in the national property claim database, also known as Comprehensive Loss Underwriting Exchange (CLUE), for approximately three to seven years, depending on your insurer. But on average, you can expect a claim to leave a mark on your record for around five years. After that, your premiums decrease, though they may not return to the original rate. 

If you’ve accumulated multiple claims on your record during the three to seven year period, insurance companies may charge you higher premiums or deny you coverage altogether.

What Is a Clue Report?

A CLUE report, which stands for Comprehensive Loss Underwriting Exchange report, is a document produced by risk solutions company LexisNexis that provides a seven-year history of your personal, auto, and property claims. Insurance companies use CLUE reports to calculate your rates and determine how risky you are to insure. 

Generally, the more claims you have on your CLUE report, the higher your insurance premium may be. Thanks to the Fair Credit Reporting Act, you can request a free copy of your CLUE report each year online by visiting LexisNexis’ website

How To Prevent Rate Increases

  1. Perform Maintenance: The most straightforward way to prevent rate increases is by taking care of your home to reduce the likelihood of damage and, hence, the number of claims. For example, scheduling regular plumbing maintenance to prevent significant water damage later on.
  2. Higher Deductibles: Choosing a higher deductible can typically lower your insurance premiums, but you may have to pay more out-of-pocket upfront for future claims.
  3. Avoid Making Small Claims: Since homeowners insurance companies could increase your rates after a claim, it’s better to pay for small losses out of pocket if you can afford them. 
  4. Weather Preparations: In some states like Florida, homeowners insurance companies may give you a discounted rate if you have a qualified wind inspection to show that your property can withstand strong winds.
  5. Post-Claim Measures: After filing a claim, ensure the damages are repaired properly to prevent further claims of the same nature. 

Putting It All Together

As a homeowner, knowing your home’s claims history is important. If you have not already, check your CLUE report to keep track of the number of claims you’ve filed in the past. If your homeowners insurance rates have already gone up due to filing multiple claims, do not panic. Consider shopping around and comparing rates from other insurance companies to see if you could find a better deal. 

If your claim was denied, but no payout was made, it typically would not directly impact your insurance premiums. However, insurers may still take note of the claim in their records, which could potentially affect your future coverage or rates.

Yes, it most likely will. When you switch insurance companies, the new insurer may inquire about your past claims history and consider it when determining premiums. And in general, home insurance claims can generally stay on your record anywhere from five to seven years. However, each company has its own policies, and some may place less weight on previous claims.

Yes. While appealing a premium increase may not always guarantee a change, you should still contact your insurance company, discuss the reasons behind the increase, and politely ask them to reconsider their decision. Be sure to go into the conversation prepared and provide any relevant documentation or evidence that supports a different assessment.

No. It’s typically not possible to remove a valid claim from the insurance record. However, as time passes, the impact of the claim on premiums may diminish and even disappear after five to seven years. However, if you believe a claim on your insurance record is inaccurate, contact your insurance company and request the paperwork associated with that claim, then look up your CLUE report from LexisNexis and open a dispute.