Will my homeowners insurance go up if i file a claim?

To keep your policy active and your house and assets covered, you must pay your insurance premium on a monthly or annual basis. While you should not hesitate to use your homes insurance in the event of storm damage or a break-in, it's vital to keep in mind that filing a claim might raise your premiums – sometimes dramatically.

But when is it appropriate to file a homes insurance claim, and when should you cut your losses and pay for that new roof or laptop yourself? It depends on the type of claim and the amount of the claim. It would help if you also thought about your policy deductible, which is the amount you pay out of cash before your insurer reimburses you for the rest of the loss.

Property theft and water damage, for example, are likely to be considered as hazards that are more likely to occur again than, say, a one-time windstorm that caused a tree to crash into your house. Personal liability claims are also regarded as red flags by insurance providers; having one in your claims history will raise your premiums and make it more difficult to obtain coverage in the future.

After a claim, how much does your homeowner's insurance go up?

When you file a homes insurance claim, your rates may go up a little or a lot, depending on the type of claim you file. However, according to Fabio Faschi, Property and Casualty Lead at Policygenius, a first claim will most likely cost you 7–10 percent more than your current house insurance rate. That means that if your premium is $500, you could see a $50 increase after your first claim, depending on the type of claim and payout.

After non-weather-related claims like theft, vandalism, and internal water damage, insurance companies are more inclined to raise rates or target policies for cancellation or nonrenewal. Personal responsibility lawsuits, which frequently result in the most significant insurance payouts due to astronomical legal bills and settlements, may also result in a massive increase in your premiums. Liability claims may make you uninsurable in the future for some firms.

That's not to say you shouldn't submit a personal liability or theft claim if you're sued, or your belongings are stolen - you should undoubtedly do so if the insurance payment outweighs any increase in premiums. Just keep in mind that some claims have a more significant impact on your premiums than others.

How long does it take for a homeowner's insurance claim to appear on your record?

Depending on the insurance company, homeowners insurance claims might stay on your record for up to seven years. However, certain businesses, such as Swyfft, discontinue considering previous insurance claims after three years.

Most firms have access to your claims history thanks to national databases that keep track of claims for a set number of years. CLUE (Comprehensive Loss Underwriting Exchange) is the most often used customer claims database; shares will typically stay on your CLUE report for up to five years. Based on the facts in your CLUE report, insurance companies may raise your rates or refuse you coverage.

Keep in mind that these databases contain claims from previous owners as well. That is, if the previous homeowner filed three theft claims in five years, your insurance might deem the region to be at high risk of theft and raise your premiums. However, adding some security features, including deadbolts and security cameras, can offset any premium rise caused by a claim.

Are there any regulations that make it illegal for firms to raise premiums?

Because insurance firms are regulated at the state level, you'll have to rely on the consumer protections put in place by your state's insurance department. However, most states have consumer protection laws that prevent firms from taking action against your insurance after a filed claim.

Several jurisdictions ban premium hikes or nonrenewal after basic claim inquiries, zero-dollar claims (claims that did not result in a reimbursement), and single claims. A few states restrict insurers from utilizing weather or natural disaster claims as justifications for premium increases or nonrenewal.

Contact your state's insurance department or go to their website for a complete list of homeowner insurance consumer safeguards.

Which claims are most likely to result in a rate hike or cancellation?

The truth is that not all claims are created equal in the perspective of your insurance carrier; certain sorts of damage or loss are more likely to occur again than others. If you submit a claim for one of the risks listed below, you could face a premium rise and possibly nonrenewal if it's your second or third claim in the last five years.

• Mold or water damage claims
• Claims for liability or dog bites
• Theft allegations
• Insurance claims due to fire

If you have a claim connected to any of these risks, you should pay close attention to your policy deductible. Filing a claim that isn't even double your deductible amount may not be worth it.

For example, if $1,700 worth of property was stolen from your home and you have a $500 deductible, you should file a claim; your rates may go up depending on your loss history, but you'll still get $1,200 to replace your stolen property. If your deductible is $1,000, though, filing a theft claim might not be worth it. You'd still get a reasonable $700 payout. Still, it might be tiny enough to cover out of pocket and avoid a rate hike - but it all depends on your financial circumstances and the urgency with which you need to replace the stolen property.

How to avoid an increase in your home insurance premiums

Here are a few things you can do to prevent your homeowner's insurance company from raising your premiums after a claim:

Only file claims for natural disasters.

Being picky about filing insurance claims is one method to keep your home insurance premiums from rising and possibly obtain a claim-free discount on your coverage. If the damage to your home is modest and you can quickly pay for it with your own money, that might be the best option. Save your home insurance claims for natural disasters or significant property losses.

Examine your CLUE report.

Request a copy of your CLUE report to acquire your 5-year loss history as well as the property's loss history. If you're thinking about buying a home or have recently moved in, you should look into the home's loss history. If there isn't a loss history, that's wonderful; you may not have anything to be concerned about. However, if the home has a history of mold growth or water damage, you might want to reconsider living there in the first place. You can also utilize the CLUE report's contents to negotiate with the seller or include a repair or mold treatment contingency clause in your offer.

Take into account your deductible.

Try to avoid making claims that are less than double your insurance deductible, like we just mentioned.

Make sure you don't file too many claims.

Most insurance companies will be fine with one claim within three or five years in terms of underwriting and rate-setting; it's when the claims start stacking up that firms contemplate a rate hike or policy nonrenewal. Consider whether making a second or even third claim within five years will make the house too expensive to insure.