Will Filing a Homeowners' Insurance Claim Raise Your Rates?

12/29/2018 (Permalink)

Flooded home in Johnson City, TN

It's common knowledge that when a person gets into a car accident, his or her car insurance rates go up. When a person is diagnosed with an illness or utilizes his or her health coverage a lot, his or her health insurance rates go up. So, it would make sense that if you were to file a homeowners' insurance claim, your homeowners' insurance rates would go up, right? Unfortunately, the logic behind your thinking is sound. That said, there are some ways in which you can minimize your risk of rate hikes and keep your premiums relatively low.

Items That Often Result in Rate Hikes

First and foremost, it's important to understand what causes insurers to raise rates in the first place. Surprisingly, events such as a home flood or burglary often don't lead to extensive rate hikes. This is because your insurance company likely already included the cost of the risks in your policy, and also because the two examples are unforeseeable events. That said, your insurer may punish you if it receives an insurance claim for any one of the following:

• Frozen pipes
  
• Burse pipes
  
• Mold remediation
  
• Secondary water damage
  

This is because each of the above items is preventable. If your insurance company doesn't decide to drop your coverage, you can almost count on an increase in coverage rates.

How To Avoid Rate Hikes

If you're like most homeowners in Johnson City, TN , you will only file a claim in the event of a large loss. That said, because you're not likely to file a claim for a minor event, it makes zero financial sense to have a low deductible. If you plan on paying for the first $500 to $1,000 out of pocket, set aside that money in an interest-bearing account and, if needed, use it to repair your home. In the meantime, raise your deducible to match that amount. This will keep you from using your insurance needlessly and therefore, risking a rate hike.

Unfortunately, you cannot always avoid filing an insurance claim, and unfortunately, you can almost always count on a rate hike if you do. If absolutely necessary, you may be able to convince your local water remediation team to negotiate with your insurer for better rates on your behalf.