When your home suffers property damage, your thoughts naturally turn to your homeowner insurance policy. You’d like to recoup some of the money that you’ve spent insuring your house but worry that the claim will make your insurance premium go up. To be honest, your claim has a good chance of triggering a premium increase. If your losses cost quite a bit more than your deductible, then filing a claim is worth it. On the flip side, if repairs will only cost maybe $1,000 to $3,000 over your deductible, then it likely makes financial sense to skip filing a claim for the sake of avoiding a rate hike.
Preparing for Filing a Claim
In the immediate hours and days after a property loss, you may not know for sure if you’re going to file a claim. Even so, you should prepare for the possibility. You typically have about 14 days to notify your insurer of the event.
This gives you a little time to ponder the financial consequences. As soon as possible, take pictures with date stamps of the damage. Keep copies of all receipts for any emergency services you had to pay for in the immediate aftermath. This evidence will be very useful should you choose to move forward with a claim.
Pro tip: Contact your insurance agent to discuss the situation without formally filing a claim. Your agent can review your current coverage with you and provide valuable insights that will help you make a decision one way or another.
Insurance Adjusters
Most claimants are serviced by an adjuster employed directly by the insurer or as independent contractor. For large claims, you might consider hiring a public adjuster, who you would pay to represent your interests. If thinking about hiring a public adjuster, you should look at adjuster reviews before choosing someone.
How Different Types of Claims Impact Homeowner Insurance Rates
The reason for your property loss plays a role in whether your insurer require a higher premium. Frequency of claims also affects your premium. A second claim within a few years is much more likely to result in a higher premium.
Reporting by the consumer credit reporting agency Experian revealed the average percentage of increases in rates.
- Fire damage – 29%, second fire claim – 60%
- Theft losses – 27%, second theft claim – 55%
- Liability for lawsuits – 25%, second liability claim – 52%
- Water damage claims – 25%, second water damage – 50%
- Medical injury claims – 18%, second medical claim – 34%
- Weather damage claims – 16%, second weather damage claim – 29%
Additionally, the overall cost of your damages will influence future premium increases as well. A very costly claim is more likely to inspire your insurer to raise your bill.
Due to how your claim may affect your future premium, it’s important that your adjuster is qualified to evaluate your damage. Fire damage requires different knowledge and experience than weather damage. Not every adjuster is experienced with all issues. For this reason, you have the right to review your adjuster based on how that person understands your property damage.
As you can see from this information, insurers view fires as a more worrisome problem than weather. Insurance actuaries apparently conclude that homeowners have more control over some fire hazards than if a wind storm occurs.
Keep in mind that if you file a claim, but it is DENIED, then your premium should not rise just because you filed that claim.
Location Sensitive Insurance Premium Increases
Where you live matters in terms of how much you pay for homeowner insurance and when an insurer can raise your premium.
First of all, insurers must comply with state regulations. Your state might not allow a premium increase after you make a claim for weather-related damage. This is definitely something for you to look into when thinking about claiming weather damage. Your state might insulate you from a rate hike.
However, a region prone to severe weather will give insurers a right to raise premiums. This is not related to your individual claim but rather the insurer calculating that insuring any home in your area incurs more financial risk. Places where tornadoes, hurricanes, wildfires, and flooding are increasing over historical averages are experiencing rate hikes across the board.
Theft and vandalism risks on the neighborhood level will factor into your premium calculation. If crime is historically bad or rising, then insurers will apply higher rates to your zip code.
Another thing that matters is local construction costs. The expense of labor and materials and compliance with local codes differ from region to region or state to state. Insurers have to use this data to figure out replacement costs. To review your adjuster in terms of how accurately replacement costs were figured, understand that local construction costs impact the final total.
How to Find Out Claims History for Your Home Before You Owned It
You might be frustrated to learn that claims made on your property by previous owners can result in higher premiums for you. The Comprehensive Loss Underwriting Exchange (CLUE) database stores claims data for homes and automobiles for up to seven years.
Unflattering adjuster reviews might actually result from things outside an individual’s power. Insurers look at previous claims. If they are present, then they deem the property at greater risk of future claims.
If you have not owned your home for long, you can check on previous claims yourself by contacting the database operated by LexisNexus. You can request the Home Seller’s Disclosure Report to see if any claims remain on the home’s record. If the record is clear of claims, then your new claim would impact your premium much less than if there were two or three recent claims on file.
On a happier note, as old claims age out of the database, you might qualify for a lower premium again. Not all premium increases are permanent. Some companies remove them in as little as three years although it could take seven years.
Will My Homeowner Insurance Drop Me for a Claim?
Your insurer might decide not to renew your homeowner policy after a claim. This is usually done through a non-renewal when the company gives you notice that it will not allow you to pay the next premium and continue the policy.
An outright cancellation during the term of the insurance contract before the renewal date is rare. Exceptions arise when the company suspects you of fraud or discovers that your home is in a bad state of disrepair.
Realistically, your specific claim was likely not the sole motivating factor for your non-renewal unless you had made multiple claims already. The claim probably coincided with many policy holders in your area making claims, which caused the company to decide the region was too risky to insure.
Insurers can and do pull out of entire regions mostly due to growing severe weather and wildfire threats. Both of these issues have increased in recent years. Areas where homes suffer damage more often make it impossible for an insurer to profit. For example, a large natural disaster, like a bad hurricane in Florida, puts entire insurance companies out of business.
How to Evaluate Your Insurance Adjuster’s Service
When you want to rate your adjuster, you should know how to make a fair assessment. Slow service and inconsistent communication from an adjuster could result from the person being overworked instead of malicious intent. That being said, slow service and poor communication could be red flags that an insurer is not meeting its obligations to you.
States impose regulations on insurance adjusters in an attempt to make sure that they represent the public interest. As a party to the insurance contract, you deserve to be treated fairly and receive the compensation that you’re rightly owed. The office of your state’s insurance commissioner should have resources available letting you know what standards your adjuster should meet.
Some warning signs that your adjuster is failing you include:
- Asking questions week after week instead of reporting the status of your claim. You need a timely response to your claim. An adjuster who keeps demanding more information could be struggling to value it or be disorganized.
- An adjuster who responds to your concerns with a terse “look at your policy” comment. This is poor customer service. The adjuster should show you the area of the policy that influenced a decision instead of trying to make you feel ignorant.
- Suspiciously low settlement offer. You know that you have more coverage available and the damage looks expensive, but the adjuster seems to have an unrealistic opinion. Although adjusters are a conservative bunch, because that’s what insurance companies want, you may need to get a second opinion if the numbers seem unreasonable.
- Delayed payment. Your adjuster valued your claim and said that the money was coming, but then…nothing. Your adjuster might have said things before actually finalizing a claim due to being overworked, losing paperwork, or uncertainty about the claim’s value. In a worst case scenario, you might have a bad faith insurance problem where the company is dragging its feet on purpose.
When you review your adjuster at Reviewyouradjuster.com, evaluate the person’s performance as accurately as possible. The information will help the next homeowner know what to expect.