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Does homeowners insurance go up after a claim?

Fact-checked with HomeInsurance.com

Moving into a new home without first purchasing a homeowners policy would be unthinkable, and if you have a mortgage, impossible. After all, you need the protection home insurance provides if disaster strikes. Home insurance can help pay to rebuild your home after a fire, replace stolen personal property or pay medical bills if a guest takes a tumble while visiting you. But how much does insurance go up if you make a claim?

Filing a claim can lead to a premium increase depending on several factors, such as the type of claim filed and the claim payout amount. Your premium will be affected depending on your claim. If you’re unsure how filing a homeowners claim might affect your insurance rate, follow along, and we’ll show you how you might avoid a costly insurance premium increase.

Why do claims increase home insurance premiums? 

By insuring your home, an insurance company assumes financial risk. When you file a claim for a covered loss, the insurer must meet its financial obligation by paying what it legally owes. According to the Insurance Information Institute (Triple-I), between 2014 and 2018, U.S. insurers paid nearly $13.7 billion, just in property damage claims. You purchase homeowners insurance to cover losses when disaster strikes. But, when you file a claim, the provider may consider you a higher risk and more likely to file more claims in the future. When that happens, the carrier may increase your insurance premium.

Claims by Type 

  • In 2018, liability claims accounted for less than 2% of homeowners claims.
  • Water damage and freezing losses accounted for nearly 24% of home insurance claims in 2018.
  • In 2018, wind and hail damage accounted for 34.4% of property damage claims.
  • Fire and lightning damage accounted for nearly 33% of homeowners claims in 2018.
  • Between 2014 and 2018, 5.6% of home insurance policyholders filed a claim.
  • In 2017, homeowners insurance rates increased by an average of 1.6%

Which claims can result in a rate increase?

  • Fire
  • Liability
  • Dog bites
  • Water damage
  • Theft

All claims can result in a premium increase, but the amount of the increase depends on the situation. According to Triple-I, fire claims are the most severe in terms of loss amount. Fire and lightning claims accounted for an average of nearly $80,000 in losses per individual claim between 2015 – 2019.

Liability claims, such as medical expenses and legal fees following an accident in your home, come in second based on overall average losses. Oftentimes, dog bite liability claims are very costly for insurance companies, because they can result in medical expenses and legal costs, sometimes including a court award.

How long does a claim affect your homeowners insurance?

Typically, claims filed in the last three to seven years have the most impact on your home insurance rate. Catastrophic losses such as a complete rebuild following a fire, as well as liability losses, may have a greater impact on your rate. Filing multiple claims within a short period will likely lead to a rate increase and potentially cause your insurer to nonrenew your coverage. 

Your claims-filing history is very important for insurers to understand the risk they’re taking on by insuring your property. Insurance companies contribute claims data to the Comprehensive Loss Underwriting Exchange database, administered by LexisNexis. When you file a claim, it is logged on that report. Insurers access the database to find out what claims, if any, have been filed at your current location or at a previous address in which you lived. Depending on your claims history, your premium (and insurance eligibility) may be affected.

How to keep your homeowners insurance rates low

If you’re looking for a new home, shop around to find the lowest rate. And, if you already own a home and want to reduce your premium, the following tips may help you achieve a lower rate:

Increase your deductible

A low deductible – say $500 or $1,000 – can seem like a good way to save on your homeowners insurance. After all, the lower the deductible, the less you’ll have to pay out of pocket if a covered loss occurs. But increasing your deductible can lower your premium if you can afford the higher deductible in the event of a loss. If you have enough savings to cover minor damages, raising your deductible may decrease your monthly insurance payment.

Maintain your credit

Depending on the state, insurance companies can sometimes use your credit-based insurance rating as a factor when determining your premium. Policyholders with poor credit may pay more for home insurance in certain states. Maintaining your credit score can help keep your credit-based insurance score higher, which may lead to a lower premium.

Bundle home and car policies

You may save money on both policies when you purchase auto and home insurance from the same provider. If your homeowners insurance increases after filing a claim, bundling your policies with the same carrier may help you offset the increased premium. 

Install safety and security devices

Major carriers extend discounts for homes equipped with safety devices such as fire alarms, smoke detectors and sprinkler systems. You may also earn a discount for installing a security system, and an increasing number of insurers offer reduced rates for homes equipped with smart home devices.

Fortify your home

When you strengthen your home against the elements, you could earn a discount. For instance, State Farm extends discounts on homes equipped with impact-resistant roofs and Farm Bureau offers a discount just for replacing your old roof. You can also save money on home insurance when you install storm windows or storm shutters.

Inquire about other discounts

Most insurance companies provide additional alternative options to reduce your premium, which can net substantial savings. For example, American Family offers discounts when you purchase a newly constructed home and when you replace electrical, heating and plumbing systems in older homes. Some insurers also offer discounts when you pay your premium in full, set up automatic payments or opt for paperless billing.

The takeaway

  • Filing a claim may lead to a premium increase. 
  • The severity and frequency of the claims filed affect your rates and possibly your eligibility for insurance.
  • Insurers offer many discount options to help you offset increased insurance premiums.

You carry home insurance to help pay for losses when catastrophes occur but filing a claim can have an impact on your premium. If you can afford to pay out of pocket for minor losses, you can avoid a potentially costly increase. The severity of the claim and frequency of claim history play a role in potential rate increases.

When searching for a new home, it’s best to shop for insurance first to see the discounts insurers offer. Providers extend all types of discounts to help lower your rate. From discounts for new construction, to savings for renovating an older home’s major systems or installing safety and security devices, there may be ways to keep your premium affordable.

Michael Evans

Michael is an insurance writer for Coverage.com. He began writing professionally in the 1990s while working for the world’s first online mortgage broker, and today specializes in education, finance and retiring abroad. Michael has contributed to numerous digital and print publications, including Bankrate, Fox Business, International Living and Yahoo Finance, and is the author of Escape to Colombia, 1st Edition, a comprehensive guide to retiring to Colombia.

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