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Homeowners Insurance: When Do You File A Claim?


Homeowners insurance is designed to cover damage to your property caused by certain covered events. It stands to reason that as you are paying your premiums, you should take advantage of available coverage. However, the reality is that it is not always advisable to file a homeowners insurance claim, as it can lead to higher premiums or even cancellation in some cases.

Underwriters tend to frown on policyholders who make more than the average number of claims. They prefer to continue insuring homeowners who make the fewest number of claims. In deciding whether to file a claim, consider the following:

  • Don’t claim the smaller stuff: It may not be in your best interests to file a claim for $5,000 or less. A single claim can result in a considerable increase in your premiums.
  • Take the largest deductible you can afford: Insurance companies offer deductibles ranging from $250 to $25,000. Consider carrying a deductible of at least $5,000. Anything less falls into the category of the smaller stuff that you should not claim anyway. A higher deductible can mean significant savings on your premiums. If your insurance company does not offer deductibles as high as $5,000, take the highest deductible available.

How Does Filing a Claim Affect Your Homeowners Insurance Premiums?

Filing a claim can affect your premiums in two ways. First, your premiums are likely to increase considerably. Second, if your policy is cancelled for filing claims, you will need to find another insurer. This can difficult with a claims history, and you can expect to pay more in premiums and fees. You may have to settle for insurance that protects your home but will not fully cover all the costs of rebuilding.

Why Is It that Consumers Paying for Insurance Cannot Use it without Losing It?

You can use you homeowners insurance without losing it, but only very infrequently and not exceeding the national average for claims. Most insurance companies will not cancel a homeowners policy for only one claim. However, filing a second claim within a certain period of time could have financial repercussions in the form of a higher premiums, possible cancellation, and higher costs with less coverage if you are forced to look for a new carrier. Even a claim that is denied can impact your rates.

How Clean Is Your CLUE Report?

Insurance companies keep track of your claims history in a form that is similar to a credit report. They use the Comprehensive Loss Underwriting Exchange (CLUE), which shows all your personal property and auto claims over the past seven years. Every claim that is paid out is reported, and a file is set up for every claim denied.

The more you use your homeowners insurance, the more it is likely to cost you in the future. Although it can be frustrating not to use the coverage you are paying for, it could cost you more in the long-run if you do. Contact our knowledgeable agency for guidance on when to file a homeowners insurance claim.

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