With ever increasing homeowner insurance premiums, more and more Florida homeowners are asking themselves if they should file a claim, and if they do file a claim, will it cause their homeowner premium to increase?
In a perfect world, you wouldn’t have to worry about the impact a claim may have on your homeowner premium. You could just file the claim and get the help you need. But in today’s insurance marketplace, Florida homeowners must do everything they can to control the rising cost of homeowner’s insurance, and that means becoming informed about the claims process and what effects filing a claim will have on their homeowner’s insurance premiums.
Armed with a little information about what your homeowner’s policy covers and how claims can affect premium, you can make a smart decision about whether you want to file a claim and what the impact could be on your homeowner insurance premium.
Homeowners Claims History
Many factors determine the premium of a homeowner policy, and if that premium will increase based on a claim.
Some of those factors are beyond your control – general rate increases, increasing construction costs, and in Florida, more serious natural disasters. But there is one thing that you may have some control over that could determine whether your homeowner insurance premium will increase if you file a claim, and that is claims history.
Why can a claim can cause my Homeowners Premium to increase?
Among other things, homeowner insurance policies are rated based on risk. The risk as a homeowner is the likelihood that a claim will be filed. From a rating perspective, if a homeowner has never filed a claim, their risk is low. The homeowner’s insurance company likes that, and this could make a good risk factor. In fact, the insurance company may even give a small discount on the policy for never having filed a homeowner’s claim.
On the other hand, if a homeowner has filed several claims over a few years, or has a claims history involving water damage, dog bites or personal liability claims, the carrier may decide to increase the premium. These types of claims make for a larger risk as far as the insurance company thinks, and they may raise the homeowner’s insurance premium or they may not offer to renew the policy come renewal time.
Keep in mind, one claim may not cause an increase in a homeowner’s premium, especially if the claim is due to a weather event, but recurring or frequent claims could increase your homeowner’s premium. Also claims and claims inquiries are compiled in a database of underwriting information and this information is shared amongst insurers.
This doesn’t mean that you shouldn’t file a claim if you need to. It only means that an informed homeowner can keep from filing unnecessary or relatively small claims to keep their homeowner premium as low as possible.
My Homeowners Insurance went up, and I didn’t file a claim!
It is not unusual for a homeowner to find themselves in a situation where they didn’t file a claim, but their homeowner’s premium still increased. The most common reason for this type of situation is a general rate increase.
On an annual basis, Florida insurance companies can request rate increases from the state. All insurance companies must file their rates with the state and rate increases must be approved by the state. When these types of increases are approved and applied to homeowners’ premiums, it is referred to as a general rate increase.
For example, one of Florida’s largest Homeowner insurance companies, has received approval from the state regulators to increase its rates an average 9.9 percent for most single-family homeowners in Broward, Palm Beach and Miami-Dade counties. This means homeowners in South Florida, will likely see an increase in homeowners premium whether they filed a claim.
How does the insurance company determine homeowner’s premium?
Other than claims history, the most basic rating factors for a home is the construction, how it is occupied (owner or tenant), the protection (things like smoke detectors, burglar alarms, impact resistant windows), and the exposure – in Florida meaning mostly to a body of water.
So, if I do file a claim, my homeowner’s premium will increase?
It is possible. Especially if you have filed other claims or your claim relates to personal liability or water damage.
How do I know if I should file my homeowners claim?
If you have damage to your home that is beyond your ability to repair – call your insurer. If you have minor damage and are not sure if you need to use the policy or if the policy would even cover the damage, you may want to do a little research or talk to an insurance professional before filing a claim that could raise your homeowner’s premium.
Read your policy – Before you make a claim on your Homeowners policy, it is best to learn a little about your policy. It will help you decide whether you should file the claim and risk the chance of your premium increasing. Here are some things to look for or to ask your insurance professional about:
Property covered – Some types of property are not covered on your homeowner’s policy no matter what happened to them. Special items like fine art, antiques and jewelry are not usually covered unless there is a special endorsement. There is usually no coverage for stolen cash.
Cause of Loss – What happened to the item? Think about what caused the damage. On a homeowner’s policy this is a “Cause of Loss” Most homeowner’s policies will cover for only specific causes of loss. Other polices will have exclusions.
How do I make sure I don’t file unnecessary claims that could increase my Homeowners Premium?
Get familiar with your home and perform routine inspections of your roof, windows, air conditioner, pipes and plumbing. The earlier you detect a problem, the less damage it will cause and the less likely you will be to have to file a claim.
The best way for a Homeowner to avoid a rate increase because of claims history is to not make unnecessary claims, and to be diligent in performing home inspection and maintenance.