Can Home Insurance Raise Rates After Claim?

Can Home Insurance Raise Rates After Claim?

The price that you pay for your home insurance policy is based on a number of factors and risk. In most cases, the higher the risk of a loss occurring, the higher your premium will be and the lower your risk of loss occurring, the lower it will be. One of the key factors that insurance companies use to determine a risk level, is your claim history. So, if you have submitted a claim, does that mean your home insurance rates rise after a claim?

While there isn’t a black and white answer for whether or not your policy cost will increase come renewal time after you have submitted a claim, it is important to be aware of the following possibilities.

What Can Cause Your Premiums to Rise After Claim

Insurance companies use statistics to help them calculate the risk for insuring   houses. The higher the risk of loss, the higher the premiums typically are. Statistics consistently show that people who have had a claim in the past are more likely to submit another claim in the future. Therefore, someone with a claim history may have a higher rate than someone with no past claims.

Simply put, come renewal time for your home insurance policy, if you now have a claim history you represent a higher risk of future losses and that risk may cause your insurance company to increase the cost of your premium. Charging a higher cost to individuals that pose a higher risk is also a way that insurance companies help keep costs lower for individuals that represent a smaller risk.

To Claim or Not to Claim?

Sometimes when a loss or damage has occurred, some people may wonder if they should submit a claim or not. While it may sound odd to think about not submitting a claim to your insurance company, at times it may be in your best interest long term to repair the damages yourself.

These situations are typically when minor damage has occurred, and the repair cost would be equal or slightly higher than the deductible. For example, if you had a policy deductible of $1500 and the estimate to repair damages was $1700, it may be in your best interest to pay out of pocket for the repairs. With the damages being $200 more than the deductible, you may want to consider if getting that $200 is worth the chance that your premium may increase come renewal time.

Number of Claims

The number of claims that you have submitted in the past should also be a consideration if you are debating submitting a claim. If you have already filed a claim within the past 3 years, you are more likely to be labeled a risk and see an increase in your premiums. Even if your claims are for small amounts, being labeled as a repeat claimer by an insurance company will likely result in seeing your insurance costs rise.

Making Your Decision

Before you decide on whether or not to submit a claim, you should speak to a trusted insurance broker. At Bow Valley Insurance, our knowledgeable staff can help discuss your situation and give you the relevant facts to help you make an informed decision.

If your home insurance premiums are increasing, talk to us about getting the best rate. We will shop policies at multiple insurance companies and price compare to get you the best rate available. For a free, no-obligation quote on home insurance, contact a Bow Valley Insurance professional today.