Does Homeowners Insurance Go Up After a Claim?
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Your home insurance rate may go up after you make a claim. Whether your premium rises depends on what type of claim you make, your claims history and an assessment of your property. It’s more likely that your home insurance rate will go up after a claim if you have made liability claims in the past, if you own a property with a history of claims or if you live in an area that experiences frequent severe weather.
How much do home insurance premiums increase after a claim?
The amount your premium increases after a claim depends on the nature of the claim and your claims history.
For instance, making a single liability claim, which can often be expensive, tends to raise your rates much more than a single dwelling or personal property claim. However, your insurer may also impose a substantial increase if you make multiple nonliability claims over a short period of time.
Rates may also change depending on the number of claims that come from your surrounding region, as large-scale weather events and other regional issues often result in increases.
Why do home insurance premiums increase after a claim?
Home insurance premiums increase because insurers see policyholders who file a claim as more likely to file additional claims in the future. Consequently, your home insurance rates are likely to increase after a claim if you:
- Have a history of making liability claims.
- Own a property with a history of multiple claims.
- Make more than one claim over a seven-year time span.
- File claims that suggest your property is in a high-crime area.
- Make claims that show your area is experiencing more severe weather.
Home insurance premiums can increase after liability claims
Compared to making a single claim on damage protected by your dwelling or contents coverage, filing liability claims is far more likely to lead to greater home insurance policy rate increases. Liability claims can have a particularly adverse effect on the price of your home insurance premium because they often involve high costs and litigation.
Customers who have made liability claims or are more likely to make these claims, like those who have potentially aggressive dog breeds, may even have a hard time renewing their policies.
Home insurance premiums can increase after multiple claims
Multiple claims can cause your home insurance premium to keep going up because they lead insurers to calculate that you are more likely to make even more claims in the future. The cost of your homeowners policy could increase quickly if you make multiple claims in a short period of time. This involves not only the history of claims you make as an individual, but also the history of claims made on your home by previous occupants.
For instance, say you file a claim for water damage caused by leaky pipes, or for broken-window damage from repeated break-ins. If the insurer finds that the previous owner of your property made a series of similar claims over the past three years, this might indicate the home has a persistent problem.
Insurers are able to track the last seven years of a home’s claim history using comprehensive loss underwriting exchange (CLUE) reports. Even if you've never filed a claim before, this history of similar claims by another owner may lead to a considerable increase in your home insurance cost.
Home insurance premiums can increase after weather-related claims
You might see higher homeowners insurance premiums if your claims history shows that your property is in an area that experiences frequent severe weather, or is more likely to in the future.
For instance, since states like Florida and Texas frequently experience severe weather, policyholders in those states face some of the highest costs of home insurance in the country. Insurers have also had to increase prices in parts of California and Canada in response to uncommonly strong wildfires.
As insurers acquire more storm data, it's safe to say they will continue to reassess their prices after each storm season.
Although filing a single weather-related claim may not necessarily result in a higher premium, understanding how seasonal weather trends could precipitate insurance changes for your community can make you more informed about potential price increases.