A Home Insurance Claim: To File Or Not To File

Learn when it may not make sense to file a claim on your home insurance.

Insurance is meant to protect you against financial loss. But is it really meant to protect you from any and all financial loss? When it comes to filing a loss claim on your home insurance, there may be times when not filing may be the wisest course of action. 1

According to one study, filing just a single claim could increase your monthly premium by 20%, depending on where you live. 2

What About My Premium?

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Some insurance companies may protect you against premium increases, and in Texas insurance companies are prohibited from increasing rates following a first claim. However, if it means your premium will rise, you may need to decide whether it makes sense to file a claim.

It may not pay to file a claim when:

  • The claim amount is small. Your policy will have a deductible, so even claims of $1,000 to $2,000 may not have a favorable long-term cost benefit.

  • You're not covered for a loss. Read your policy first to determine coverage. The simple act of filing a claim (even for a claim that won't be paid) may result in higher premiums.

  • You have filed a claim within the last seven years. Since previous claims are tracked by an industry database for seven years, it may result in higher premiums.

Another factor to consider: you may want to file a claim regardless of dollar amount if someone is injured on your property in order to protect yourself in the event that you are sued by the injured party.

Several factors will affect the cost of homeowner's insurance, including the location, size and contents in the home. You should consider the amount of your deductible and level of coverage before purchasing a policy. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.
National Association of Realtors, 2018

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