Will my homeowners insurance rate increase if I file a claim?!?

So you’ve had some damage at your home and you are trying to decide if you should file a homeowners insurance claim with your insurance company.  You have paid your insurance premiums every year and when you have damage to your home, of course you would file the claim, right?

Well, depending on the size of the claim, you have a decision to make.

The extent and cause of the damage should play heavily in your decision.   Most likely, you have a deductible on your homeowners policy that you will be responsible for before the insurance company begins to pay out.

For example, you have $1200 in damage to your ceiling as a result of an ice dam. Your homeowners insurance policy deductible is $1000, you would be responsible for the first $1000 and the insurance company would pay $200.

Homeowners insurance claim activity increases the likelihood that your rate will increase or that the insurance company will issue a non-renewal.

Most insurance companies now use an online database such as the Comprehensive Loss Underwriting Exchange (CLUE).  Losses are reported and recorded with the CLUE database.  More than 98% of insurers writing auto and home coverage report loss data to CLUE according to LexisNexis, who operates CLUE.

More and more insurance carriers in Massachusetts are starting to use loss history as a rating factor in today’s market.  While filing a single homeowners claim may not result in a non-renewal or cancellation, it may lead to an increase to your premium on the next renewal.

Some carriers also use a “loss free credit” that could be removed from the policy while others use a “loss history rating plan” that factors the loss into your homeowners premium.  Filing multiple claims in a short period of time, say 2 or 3 years, may result in a company not offering renewal terms on the policy.

An independent insurance agent can help you find another market for your homeowners insurance if the policy is non-renewed for loss history.

Wait, so do I file a homeowners insurance claim or not?

Ultimately, the decision is up to you but it is recommended that you enlist the help of your independent insurance agent.  Independent agents work with multiple carriers and have seen a number of claims, likely very similar to what you are going through.  If you have a large claim, and are unable to afford the repairs on your own, file the claim.  After all, that is why you carry homeowners insurance right?

All claims scenarios and carriers vary slightly.  If you do have a claim, you will have to decide if the damage is extensive enough to warrant the claim activity in the database.

Need help with your homeowners policy?  You’re in the right place!  Contact our office today and a home insurance specialist will help you determine your individual insurance needs.

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