How Much Do Homeowners Insurance Claims Increase Premiums

Unfortunately for homeowners, claims do increase their home insurance premiums. How much depends on the claim type and size. Also, the previous claims history for the property and the homeowners personal claims history (for all other properties) also factor in.

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Approximate Premium Increase Percentages You Can Expect After Filing Home Insurance Claim

While how much your rates increase varies by the circumstances of the claim, history, and insurance company, here are the average premium increases for common situations:

Filing a second fire claim — 60%

Filing a second theft claim — 55%

Filing a second liability claim — 52%

Filing a second water damage claim — 50%

Filing a second medical claim — 34%

Filing a second weather claim — 29%

Filing a fire claim — 29%

Filing a theft claim — 27%

Filing a liability claim — 25%

Filing a water claim — 25%

Filing a medical claim — 18%

Filing a weather claim — 17%

As you can see, filing second claims makes a big difference, especially if it is the same type of claim you filed before. Insurance companies know that, statistically speaking, the chances of an insured filing a particular type of claim is higher if they have filed a similar one before.

For instance, a homeowner who has filed multiple theft claims may live in a high crime area or fail to employ security measures, increasing the risk of similar future claims. In another case, numerous fire claims may occur because the property is located in an area prone to brush fires. Hence, the presence of past fire claims indicates a higher risk of future liabilities. Finally, based on the same line of reasoning, past weather claims may show that the property has little natural protection from severe storms and may suffer damage by subsequent extreme weather events.

What Else Increases Home Insurance Rates?

Claims are not the only factors that can lead to a hike in homeowners insurance premiums. Some of the typical causes of premium spikes to be aware of include the following:

  • More homeowners insurance claims in your area
  • Extreme weather
  • A crumbling roof
  • A pool, hot tub, or outdoor spa
  • Pets
  • Age and construction of the home
  • Credit history

More Claims In Your Area

Insurance companies base their rates on a multitude of statistics. One they pay close attention to is the number of claims in your area. Even if you have never filed a claim, the claims of your neighbors could result in a broad increase for the whole area. For example, a rash of burglaries in your neighborhood could result in higher insurance bills.

Home Maintenance Problems

A home falling into disrepair costs more to insure. Old roofs or foundation problems, for example, increase the chances of accidental injuries, resulting in higher rates. 

Features In Your Home

Pools, hot tubs, or outdoor spas are wonderful amenities, but they do increase homeowners insurance premiums. They simply increase the risk of claims, so you pay more for insurance. 

Pets

While cats and guinea pigs are unlikely to result in large insurance claims, dogs, especially certain breeds, increase the chances of a dog bite lawsuit. In addition, exotic pets may raise premiums into the stratosphere, though in some cases, the insurance company may refuse to insure against claims related to certain animals. 

Poor Credit

Insurance companies thrive on finding correlations between the characteristics of policyholders and claims. Credit history is one such correlation. Insurers have figured out that people with poor credit scores file more claims, so they charge accordingly. 

Claims increase your premiums, but the increases are likely to be far less than the claim itself. If the damage is under your deductible, it may make sense to simply handle the repairs yourself. However, when the damages run in the thousands, tens of thousands or hundreds or thousands of dollars, any increase in your premiums is negligible by comparison.

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