Do Home Insurance Claims Increase Premiums?

You’ve taken all the right steps as a homeowner, renter, landlord or condo owner to protect your property sufficiently, and you’re totally ready to utilize your insurance if you need it.

You shouldn’t have to hesitate to use your home insurance. After all, it’s supposed to be there to help you out. But, you should know how filing a claim can affect your premium.

They can, although it depends on what kind of claim you file. A general rule of thumb is the more claims you file, the higher your premiums will become. But, even a single claim can cause a rate increase.

Your home insurance policy will cover you if your property or belongings have been damaged by a covered peril. Some claims can cause “red flags” for your provider, though, and these are the ones that will have a greater effect on your premium. Dog bite and theft claims can be particularly problematic to your rate.

A personal liability claim, especially one for a dog bite, will likely cause your premium to go up. This is because these claims are more likely to happen again. For example, it’s more likely that your Rottweiler bites someone for a second time than a wildfire burns your home again. Also, liability claims can have significant medical and legal costs that need to be covered. 

A theft claim could also affect your rate for the same reasons. A burglary is more likely to happen more than once than an extreme weather disaster. Also, it could be indicative of a worrying trend of increased crime in your area, which insurance companies don’t like. 

A claim due to internal water damage could also cause concern. It may lead your insurer to believe you’re not as responsible as you could be.

While this may not be totally accurate, your pipes and water heater are ultimately your responsibility. An insurance company can’t give everyone the benefit of the doubt when something goes wrong with these, so your rate could increase after filing a claim due to a water damage issue.

If you file multiple claims in a short period of time, this will almost certainly cause your premium to go up. Filing several claims illustrates an increased financial risk, so your insurance company will make you pay more to offset that risk it’s taking on. Filing too many claims could also cause your provider to drop you entirely.

Your home insurance premium increase without filing any claims. There are reasons both in and out of your control that may explain this.

A recent home renovation could’ve caused your rate to go up. Putting in a swimming pool or remodeling your basement likely made your home more valuable, which is a good thing if you end up selling it down the line.

However, it also means your home would cost more to rebuild in case of a disaster. Your premium would increase to reflect this change. Smaller-scale purchases like buying a trampoline or a dog, especially a high-risk breed, could also increase your home insurance.

Unfortunately, factors you’ve had nothing to do with can also affect your rate. If your area has seen an increase in crime or severe weather events, your insurance company may become wary. They could increase your premium to offset the increased chances of a potential future payout. 

It’s also possible that your provider has been experiencing financial losses. A major goal of an insurer as a company is always to be profitable. If a firm has seen an unexpected increase in filed claims, it could increase some policyholders’ rates to make up for the money it’s lost.

Luckily, to combat the different ways your home insurance can go up, there are a few things you can do to lower your premium, such as reviewing your policy every year and eliminating unnecessary coverages.

If you change your mind after filing a home insurance claim, you can usually cancel it, given, of course, that you haven’t received a payout yet. Just contact your insurance provider sooner rather than later.

If you decide you can cover the damages yourself, you may want to cancel a claim to prevent your premium from rising. Sometimes it isn’t worth filing a claim, especially if the payout would be lower than your deductible. While it may stay on your record or in a national database, a canceled claim probably won’t increase your rate since there was no payout.