There are specific ways that insurance companies track your claim history. One of the main factors that contribute to your total cost of homeowners insurance is how many and the severity of claims that you have had in the last 5 years.
Did you know that anytime you shop around for insurance that the insurance companies can pull up a loss history report card? It is called a “CLUE” report and is used for every new homeowners policy. We will analyze below some of the important side effects of claims:
- When you are looking to purchase a new home please remember that if you have claims at your current home They Will Most Likely Affect Your Rate on A New Home! – Your claim report card follows you wherever you go.
- When you have an issue in your current home, please evaluate the severity of the issue before submitting a claim. Upon renewal, a standard homeowners policy surcharge for a claim is 20%. This surcharge can last 3 years. With the future surcharge along with your deductible, a small claim may be worth paying out of pocket. Does it make sense to submit a claim if you will pay all that money back to the insurance company anyway? Probably not.
- If you have had two homeowners claims in the past 5 years you may not be able to switch homeowners insurance companies even if you are unhappy with your current company and/or rate. Many insurance companies will not insure a potential client with 2 home claims in the last 5 years. The quote will be declined. That gives your current company the ability to raise your rates as high as they would like until the claims come off of your report card.
Regardless of all the information above, please remember why you have homeowners insurance. It is there to pay you in the event of a loss, especially a severe one. If you have a large water damage claim or fire the insurance company could pay you more than you would ever pay back in premiums in your whole lifetime. At the same time however, it is evident that the home insurance carriers are tired of multiple small claims. They are taking steps to deter them from being submitted.
For more information give us a call at 484-366-1281