The Claim and Blame Game: Five Claims that Raise Home Insurance Rates
Insurance, especially homeowners insurance, is a great way to protect yourself from financial difficulty when something happens to your home or on your property. However, filing a claim is not something to take lightly.
Even when there is a proper justification to file a claim, there are some claims that automatically increase your home insurance premiums and cost more over the long-term than the damage you want covered. That is why it’s important to know what claims to avoid and more importantly how your insurance company assesses claims.
You may already know that flood damage requires separate coverage, but even routine water damage from a burst pip can raise your premiums. The main reason is that in both cases water damage increases the risk for mold.
Mold damages are costly to repair and can force a family to move when too severe to treat. Because of this, more insurers are dropping water damage and mold damage from their coverage. Those that still do will raise premiums when a claim gets filed. When buying a home and afterward, check on the state of pipes and plumbing in your home.
The cost of a plumber in the short run can save you money in the long-term as insurers will raise premiums if there is a history of water damage or neglected plumbing from previous owners.
Everyone loves their pets, but depending on their breed they can raise your premiums when you file a claim. If a pet bites someone on your property your liability coverage on your homeowner’s policy will kick in when you file a claim. However, if your pet is an aggressive breed like a Boxer or Rottweiler, prepare to see an increase in your premiums as you will be an increased risk for your insurer.
Yes, a legitimate claim like a fire can raise your premiums due to several different factors. This is because of how your insurer assesses risk to your home. If you live in an area where wildfires happen, then you can expect your premiums to increase each time you file a claim due to their frequency and the few number of large insurers willing to cover your home.
Also, some companies assess fire risk differently. According to a 2008 article on Bankrate.com, companies like All State assess by the number of claims in the area and not proximity to a fire station.
Theft and Robbery
Theft is another claim that can increase premiums based on frequency. If a home is subject to more than one robbery you can expect your home insurance rate to increase. The same goes for damage caused by other crimes such as vandalism. If it is a rare occurrence it’s less likely to change your rates, but a history in the area could trigger an increase.
Slip and Falls
Slips, falls, and accidental injuries are a gray area. Rates can increase, but at the same time circumstances will play a role. Like car accidents, it depends on liability. If the homeowner is at fault, then rates will increase if the insurer has to pay damages due to legal action.
Overall, knowing the circumstances and weighing the costs and risks can limit your exposure to claims that increase your premiums. It is also important to file a claim when it’s needed. The fear of a higher premium shouldn’t stop you from using your coverage when you need it. Just make sure to make the decision with the proper seriousness it deserves.