Did you know filing a home insurance claim affects your premium?

by Jason Cass

We all buy insurance knowing that if there is an emergency or an accident, we will be protected financially. Whether our home is broken into, our car is totaled in an accident or someone trips and falls on our property, the right insurance provides peace-of-mind in knowing we are protected.

While insurance is a necessity and a great thing, it can also be confusing and overwhelming to many. Did you know there are a few different things you can do unintentionally that will actually increase your home insurance premium? Yep, it’s true.

Here are 3 scenarios that will increase your homeowners insurance premium and how you can avoid them:

Scenario #1: Making too many claims

Let’s say you make one claim for your home because of a break-in, then two weeks later you make a claim for a flooded garage and then you make a claim for a broken window that was inexpensive–the more claims you make, the higher your insurance premium will be. This is because insurance companies have data that proves the more claims you make, the more likely you are to keep making them, so the insurance company will adjust the cost of your coverage to compensate for future potential risks.

To avoid your premium rising, always carefully consider whether or not you need to make a claim and only make a claim when it is necessary.

Scenario #2: Claims from previous homeowners

Let’s say you and your husband recently purchased a new home and noticed that your home insurance premium automatically rose from what you paid for your previous home. After talking to your agent, you learn that there were claims made by the previous homeowners in the past seven years that are still on record, which is why your premium has gone up.

To avoid being surprised by a rise in premium from claims on your home that you did not make, always look into the claim history when looking at homes by viewing their Comprehensive Loss Underwriting Exchange (CLUE) report. This is a database that maintains all claims made on your home for the past seven years. While that may seem unfair, an insurer views a property with multiple claims as a higher risk for having more claims in the future.

Scenario #3: Claims vs inquiries

Let’s say your home was broken into, but nothing was stolen. You called your agent because you thought you may want to file a claim, but then decided not to. Then, you notice your premium was increased, but why? This is because simply discussing claims with an insurance company can result in higher rates.

To avoid a rise in your premium, be clear whether you are making an actual claim for damage or simply asking about whether a type of damage is covered by your policy.

Understand your homeowners insurance premium

There are many factors that contribute to the cost of your insurance, including the 3 difference scenarios list above. If you are confused about your premium rates or have questions regarding what you are paying for, schedule an appointment to meet with your insurance agent. It never hurts to ask for more information, especially when it comes to the insurance that you are buying to protect yourself, your loved ones and your assets.