Does Your Homeowners Insurance Increase After A Claim?

Homeowners insurance can help homeowners rebuild or repair their home after sustaining damage from a covered loss. Without home insurance, many would be left without a place to live – and still have a mortgage to pay. While this is a worthwhile investment, there are some things you should consider before filing a claim with your homeowners insurance company. Understanding what can happen after a claim is filed, including whether your homeowners insurance increases after a claim, can help you decide when filing a claim is worth it.

How much does your homeowners insurance increase after a claim?

Filing a home insurance claim may result in a temporary increase in your premium. The amount your premium will increase after a claim depends on a variety of factors, including:

It is also possible for your home insurance rate to increase based on the frequency of claims in your area. For example, after a major hurricane that causes significant damage in your community, your insurance rate may increase more substantially than if you filed a single property damage claim.

With a clean claims history, the average annual cost of homeowners insurance with $250,000 in coverage is $1,428. The table below highlights several types of claims, the average payout and the average annual rate after the claim.

*Based on Insurance Information Institute (Triple-I) estimates of average home claim payouts. Average rates based on a claim filed on a home insurance policy with $250,000 of home coverage.

Why do insurance premiums go up after a claim is filed?

Homeowners insurance rates often go up after a claim because it leads your insurance company to believe that you are more likely to file another claim in the future. This is especially true for claims related to water damage, dog bites and theft. To compensate for another potential claim payout, the property insurer proactively raises your premium.

The story continues

As mentioned, whether or not your insurance premium increases after a claim depends on the situation. Some types of claims affect insurance rates more than others. You should expect your rate to go up after a claim if you fall into any of the following categories:

• You live in an area with bad weather

• Your home is located in a high crime area

• You have filed liability claims in the past

• You own a home with a history of claims

• You file more than one claim over several years

Generally speaking, your insurance premium is more likely to increase if you file a liability claim rather than a property damage claim. With a liability claim, there is a chance you could end up in court. Legal fees and court settlements can be very expensive, meaning there is additional risk for you and your insurance company.

How long does damage affect home insurance rates?

If your homeowner’s insurance rate increases after a claim, know that it’s not a permanent rate increase. Most claims stay on your file for approximately five years. However, this depends on the insurance company. A claim can remain on your record for as little as three years or up to seven years. After that time, your premium should go down, although it may not return to the original rate.

Find out more: Affordable home insurance companies

Are there times when companies are not allowed to increase rates after a claim?

There are many situations where property insurance companies can raise your rate after a claim. But there are also certain situations where an insurance company is not allowed to increase your rate. Because insurers are regulated at the state level, consumer protection laws vary depending on your location.

Some of the situations that prohibit insurance companies from raising premiums include:

• When a homeowner asks about filing a claim but doesn’t file one.

• When a homeowner files a claim that doesn’t result in payment (denied claim).

• When a homeowner files a claim.

• When a homeowner files a claim due to damage from a natural disaster.

As a homeowner, it’s important to understand the consumer protection laws in your state. You can contact your state’s insurance department to learn more about the limits where you live. You can also contact your insurance company to find out which situations are exempt from rate changes.

Frequently Asked Questions

• • What is the best home insurance company?

    The best homeowners insurance company is different for every homeowner. It depends on where you live, what type of policy you want, how much coverage you need and your budget. Before purchasing a policy, take the time to shop around and compare insurers. Get multiple quotes from several property conveyancers to see who can offer the best price. For a true price comparison, collect quotes with the same coverage limits and deductibles from each carrier.

  • How Much Does Homeowners Insurance Cost?

    In the US, the average cost of homeowners insurance is $1,428 per year for a $250,000 home in coverage. However, each homeowner pays a different rate. Personal factors such as your age, credit score and claim history can affect your rate. Insurance companies also consider your home’s characteristics — such as square footage, the year it was built and overall condition — when they estimate your premium. Also, location is a factor. For example, your proximity to a fire station, fire hydrant, or if you live in a coastal area.

  • Is Homeowners Insurance Required?

    Homeowners insurance is not required by law in any state. However, every homeowner should consider purchasing a financial protection policy. Without it, you are financially responsible for any repairs and replacement of damaged personal property. If your home is destroyed by fire or an extreme weather event, you’ll have to pay the full cost of rebuilding plus continue paying your mortgage, if you have one. This is one reason lenders typically require you to have title insurance so you can afford to continue paying your mortgage after a loss.

  • What types of homeowners insurance claims are most likely to increase your premium?

    Whether your homeowners insurance premium will go up after you file a claim depends on several factors. One of these factors includes the type of claim you are filing. Generally speaking, liability claims, water damage and theft will affect your premium more than a property damage claim. Also, a new claim may have a more significant impact on your premium if you live in an area with extreme weather, in a neighborhood with a high crime rate, or have filed claims in the past.

Methodology

Bankrate used Quadrant Information Services to analyze current 2023 rates for zip codes and carriers in all 50 states and Washington, DC. Prices are weighted based on population density in each geographic region. Rates quoted are based on 40-year-old male and female homeowners with a clean claims history, good credit and the following coverage limits:

• Coverage A, Residential: $250,000

• Coverage B, other structures: $25,000

• Coverage C, personal property: $125,000

• Coverage D, Loss of Use: $50,000

• Coverage E, Liability: $300,000

• Coverage F, medical payments: $1,000

Homeowners also have a $1,000 deductible and a separate deductible for wind and hail (if applicable).

These are sample percentages and should be used for comparative purposes only. Your quotes will vary.

Claims: Rates were calculated based on the following insurance claims assigned to our homeowners: “fire ($80,000 loss), liability ($31,000 loss), theft ($5,000 loss) and wind ($12,000 loss).”