Winning a claim may seem like a cause for celebration. However, this small victory can be the means by which you lose many future battles. Many homeowners are unaware that filing a claim can result in an increase in insurance premiums. As if that's not bad enough, your claim doesn't even have to be successful for you to see an increase in your premiums.
Because of this possibility, you need to take a careful approach when filing claims, and you should know what factors affect increases in premiums the most.
Why Do Premiums Increase After Claims?
The moment you file an insurance claim most insurance companies will consider you a riskier client than you were before. This makes sense because many insurers have found that customers who've filed one claim are more likely to file another. However, it's not just the possibility of filing a second claim that puts the insurance company on high alert.
When you file a claim related to vandalism or theft, this is an indicator that the type of neighborhood you live in isn't exactly safe. This means that another theft is likely to occur in the future and this can lead to further claims.
Does the Type of Claim Matter?
The type of claim is an important factor in such situations. The claims that will cost you the most are liability claims, including from injuries. These types of claims are followed by an increase in premiums of about 14 percent on average. Claims relating to theft and vandalism can also increase your premiums by quite a bit.
There are other factors that can also impact the percentage by which your claims increase. Certain states have regulations that prevent insurers from raising premiums after just one claim while other states can see increases of more than 30 percent.
How to Limit Increase of Your Premiums
The size of the claim you make doesn't affect the increase. This means that even a small claim worth a few hundred dollars can be quite costly in the long run. Therefore, avoid filing claims for small amounts of money, such as damages and repairs that you can afford on your own.
You can also choose to raise your deductible, however, don't raise it beyond your means. You should also check what other insurers are offering at least once every year. The industry is quite competitive and you may get home insurance with the same coverage at a lower price.
For more information, reach out to an agent like State Farm Insurance: Kurt Riehl.
