People who own homes generally buy homeowner's insurance to protect them from liability claims such as dog bites and slip and falls on their property. The bank holding the mortgage might also require the homeowner to buy insurance coverage against dangers such as storms and fires. When facing personal-injury claims or damage to the property, you should first determine whether filing the claim with the insurance company will increase your future premiums.
Insurers Seeking Profits
Insurance companies rely on premiums from customers and interest from investments to make profits. When reviewing an application for insurance, an insurance company will look over the information you provide to decide whether it probably could make a profit by insuring you. Insurers sometimes conclude that certain situations are too risky to insure. They might not insure you if you live near water or own a certain breed of dog.
Average Number of Claims Filed by Homeowners
Insurers don't like customers filing a high number of claims, because lots of claims means less profit. Insurers carefully track claims and look for customers reporting too many claims. According to the Oregon Insurance Division, the average homeowner files a homeowner's claim once every nine years. The average homeowner files a claim once per decade, agent David Shaffer told United Policyholders, a non-profit consumer group.
Claims Resulting in Higher Premiums
If you report two or more claims in a three-year period, your premiums are likely to rise. Even if a customer has not filed a claim for more than a decade, just two claims can cause the insurance company to drop the customer from its preferred coverage. Insurers weigh the number of claims more than the seriousness of the claims. For example, a customer who filed four small claims probably would end up paying higher premiums than one who filed one much larger claim.
Deciding to Report a Claim
You might want to avoid reporting small claims if you can afford to pay them out of pocket. This way the insurer has no reason to raise your premiums. You also might choose a policy with higher deductibles. Although you'd have to pay for any claims falling within your deductible amount, you'd also pay lower premiums. Think carefully before calling your insurance company with questions about potential claims. Insurers keep track of these calls, whether or not they lead to claims. Even innocent questions about whether your insurance covers a certain type of damage can make the insurer view you as a bigger risk.
E.S. Martin is an attorney who has worked in civil litigation for more than eight years. He focuses his work in insurance, personal injury, subrogation and risk management.