The purpose of buying homeowner’s insurance is to protect your home in the event that it becomes unexpectedly damaged. Most of us never need to file a claim. Yet what happens if your home is damaged and you do need to file a claim? Will it have a major impact on your insurance rates? Will your premium automatically increase, or worse yet, could your insurance company drop you completely?
First of all, take a deep breath. Insurance companies are designed to help people work through accidents in the most financially sound way possible. While there are no set guidelines as to what will cause your insurance premium to increase, most insurance companies will not raise the rates just because of one legitimate claim to the homeowner’s policy.
Homeowner’s insurance focuses on the region that you live in, the number of catastrophes your area has suffered, and the type of home you have. This is how your risk is assessed and the factors that determine how much your premium will be.
Just because one claim doesn’t cause your premium to increase doesn’t mean that you can or should continue making claims. For many insurance companies, reporting three claims in a year is enough to be dropped from the policy altogether. If this happens, you may have no choice but to purchase high-risk insurance. So, before you submit any claim, big or small, be sure to weigh all of your options, as multiple claims will have an effect on your premium and your policy.
Keep in mind that the type of claim will also affect whether or not your homeowner’s policy premiums increase. If siding blows off your home during a storm, this claim will be treated differently than something you have more control over, such as a dog bite or personal injury.
The good news is that you don’t have to wait to be surprised. Use your insurance professional as a resource. Talk to your agent now about what your policy covers, your deductible, and the types of claims you may want to consider taking care of out of pocket. Do your homework and be familiar with industry practices so that you know the best steps to take when disaster strikes.