Does My Homeowners Insurance Go up After a Claim?

All of the recent snowfall may have been beautiful at the time, but it may have taken a toll on your home's roof. You are not alone if the weight of snow and ice has caused your roof to collapse, forcing you to file a claim with your homeowners insurance provider. According to the Insurance Information Institute, approximately one out of every twenty insured homes files a claim each year. But, what happens to your insurance premium if you file a claim? Will you eventually be penalized for using your insurance coverage by seeing your rate rise?

These questions have more complexities than you might think. The CompareInsurance team breaks down what happens after you file a homeowners insurance claim and how such claims affect your monthly premium in this article.

What is a home insurance claim?

When you have a qualifying loss on your home, you must file a home insurance claim with your insurance provider. Standard homeowner's insurance policies are typically designed to cover the following scenarios:

  • Smoke and fire damage
  • Storm-related or weather-related damage
  • Internal water damage that is not the result of flooding
  • Theft
  • Vandalism
  • Damage from snow or ice
  • Civil unrest has resulted in property damage.

When you suffer a loss that is covered by your insurance policy, you will file a claim with your provider in order to receive financial assistance with necessary repairs or replacement services. This protects homeowners from financial ruin when the unexpected occurs.

Do claims raise my premium?

Yes, in a nutshell. When a claim is filed, it is reported to the Comprehensive Loss and Underwriting Exchange (CLUE) database, which is open to all insurance companies and underwriters. This is where each policyholder's individual risk profile is recorded so that insurance providers can identify which customers are considered "high-risk" due to their claims history. People who have a history of filing claims at previous addresses are viewed as riskier, and as a result, their rates will rise after filing with their carrier.

Even if this is your first time filing an insurance claim, your monthly premium is likely to rise. According to a recent Insurance Quotes study, homeowners can expect the following average premium increases based on the type of claim they file:

  • Liability Claims: 14% increase
  • Fire Claims: 13% increase
  • Theft Claims: 13% increase
  • Vandalism Claims: 13% increase
  • Water Damage Claims: 12% increase
  • Hail Damage Claims: 6% increase
  • Wind Damage Claims: 6% increase
  • Medical Claims: 2% increase
  • Weather Damage Claims: 2% increase

According to the study, U.S. families who file a single homeowners insurance claim can expect their annual premium to rise by 9 percent on average, regardless of the type of claim filed.

How long do claims stay on my record?

Because all insurance claims are filed in the CLUE database, the length of time a claim remains on your record is fairly consistent across insurance carriers. Once a claim is recorded in the database, it will be kept on file for between five and seven years. During this time, insurers will be able to detect an increase in your risk profile, which will result in an increase in your premium. Only after the reported claim has been removed from your record will it no longer have an impact on your insurance rates.

Four ways to avoid increasing your premium

The average homeowner pays $1,211 per year for coverage, according to the Insurance Information Institute. The more claims that are filed, the higher the premium. Consider the following to reduce your homeowners insurance premium:

Avoid submitting claims.

Let's return to the earlier mentioned collapsed roof. Because your roof is old and unable to withstand the demands of winter weather, you may have expected such damage to occur. Rather than waiting for the inevitable collapse and filing a claim, you would have been better off saving for roof replacement and paying for it out of pocket to avoid a rate increase.

Ask your carrier

When shopping for coverage, make sure to ask your insurance agent if your rates will rise if you file one or more claims. Also, ask them if it matters how far apart claims are filed, and keep track of their responses for future reference. This will allow you to plan ahead of time by understanding how your claims will affect your monthly payment.

Increase your deductible

It is always a good idea to seek a higher deductible, as this will significantly reduce your monthly premium. However, make sure that your higher deductible is something you can afford to pay out of pocket if you need to file a claim. A high deductible can backfire in the long run if you can't afford the upfront cost of coverage before insurance kicks in.

Ask about discounts

Many times, homeowners shop for insurance without realizing that there are multiple discounts available to them. Even simple actions such as enrolling in automatic payments can result in a lower premium if your carrier offers a discount for paperless billing. Inquire with your insurance provider about any discounts that may be available to help you reduce your monthly financial obligation.

By taking these simple steps, you can avoid raising your premium while keeping your home safe from the unexpected.