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How claims affect home insurance rates

Read the Spanish version: ¿Cómo afectan los reclamos el precio de tu seguro de casa?


When it comes to auto insurance, filing a claim is serious business because your insurer may jack up your car insurance rates at renewal time. But what happens after you file that first home insurance claim? According to most industry experts, nothing much. Most will tell you that a single claim, regardless of its size or type, generally won't raise premiums.

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home insuranceIt's almost unheard of for a single claim to affect home insurance premiums, especially if it is an “act of God." This means an event caused entirely by the forces of nature.

One significant exception could be a dog-bite claim: Insurance companies may raise rates or refuse to renew your policy if a dog-bite claim has been filed against you and you’ve done nothing to lower your risk. (For more on problems with dog-bite claims, here’s home insurance for dog lovers.)

How many claims does it take to get an increase?

The next natural question is, "So how many claims does it take before getting hit with a rate hike?" The answer is: Two.

Multiple, similar claims, such as slip-and-falls, can make the red flags go up at your home insurance company.

State Farm spokesperson Phil Supple explains: "If you've been with State Farm for nine years or more, and you have fewer than two claims in a three-year period, you'll still receive a 20 percent discount. Once you get to two, you'll start to lose your discount, or if you haven't been with State Farm for as long as nine years, you'll start to see your premiums increase if you have a qualifying claim."

Supple was quick to point out that State Farm doesn't hold a grudge when it comes to a weather-related or catastrophic claim. So, if a tornado rips through your house, at least you won't have to worry about your homeowners premiums going up.

This non-weather, non-catastrophe qualifier is typical of other insurance companies. Many insurers realize that the homeowner could not have taken any action to prevent the damage from happening.

However, insurance companies are concerned with homeowners who file claims for damage caused by faulty plumbing and fail to make proper repairs -- and file a similar claim later. In these situations, insurers will look at you very carefully when it comes to renewal time. Other situations insurers look for are multiple "slip-and-fall" claims.

However, your home insurance policy is there to protect you. Don’t be hesitant to file a claim when you really need to. If a burst pipe ruins your finished basement, getting the money to repair the damage is going to outweigh a potential increase in premiums. However, it’s important to make the proper repairs so that a similar incident won't happen again.

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