Rates, claims, and your homeowner’s insurance policy

Rates, claims, and your homeowner’s insurance policy

June 25, 2021

Everyone wants to find the best homeowner’s insurance policy for the most affordable price. While there are several factors to consider in your hunt for a policy, it’s good to know how claims affect rates. It’s also good to understand how, when and why your policy can be cancelled.

Most people assume that once they obtain homeowner’s insurance, the policy is theirs until they decide to terminate it. While this is usually true, be aware that insurance companies can cancel your policy under certain circumstances. Companies may decide not to write policies in certain geographical areas that feature high claim costs, or they may decide that certain properties are too expensive to repair depending on the claims history of a particular property. Non-renewal of policies can happen in these areas, and policies can even be cancelled in some cases.

Insurance companies can also cancel your policy during a claim, although this happens very rarely. Rules regarding non-renewal are generally not as stringent as those that apply to canceling a customer’s policy. In most cases, regulations call for a certain number of days’ notice that an insurer must give the insured before their policy is cancelled. Your agent can help you determine what rules apply to your particular policy.

Filing a claim often affects insurance rates. If you file one claim in a year, you can expect monthly premiums to rise by about 10%. Making a second claim within the next 5 years will cause premiums to rise by about 20%.

The size of the claim doesn’t have much to do with the impact on premiums. Whether your claim is for $2,000 or $200,000, your rates will likely increase by the same percentage. The type of claim makes a big difference. If you make a liability claim due to someone being injured, expect rates to jump by about 15%. Vandalism and theft also tend to have a big effect on insurance rates if the company feels that your neighborhood is unsafe—and thus more expensive to cover.

In the case of large, catastrophic storms that affect a large area, insurance companies sometimes raise everybody’s rates to recuperate claims expenses and legal fees. Even if you don’t’ file a claim, your insurance could go up if storms do a lot of damage in the surrounding area. Premium increases vary by state, but once they go up, you can expect them to stay up for several years.

When you’re ready to switch your homeowner’s insurance, give us a call! We’ve been helping clients save money and protect their homes for decades. Our team can make the insuring process smooth and painless so that you can live worry-free. To reach us by phone, call (715) 754-5254 or (920) 822-3695. You can also email us at insurance@premiercommunity.com or visit www.yourpremierinsurance.com to learn more.