The average cost of homeowners’ insurance is $1,312 annually. This might not look much until certain factors – both reasonable and surprising ones begin to act on it. These factors are used in determining your risk profile. In other words, it tells how likely you are to file a claim. When these factors are weighed, and you are at high risk, chances are your home insurance rate will increase.
Key Factors That Affect Your Homeowners’ Insurance Rates
- Replacement cost (sophisticated homes cost more, hence higher insurance)
- Location (high or low-risk area)
- Age of the home
- Deductible (the higher your deductible, the lower your premium)
- Credit history (bad credit history will increase your rate)
- Marital status
- Claims history (the more the claims in your history, the higher the risk level, hence a rise in premium)
What Makes Homeowners Insurance Rates Increase After a Claim?
When you file for a claim, it gives your insurer the mindset that you will file for another one in the near future. This is particularly true for certain claims like theft and water damage. The goal of your insurer is to spend as little as possible, so they increase your insurance to compensate for further claims you are likely to make. Some factors that affect your rate after you file for a claim include:
- The weather condition in your area of residence
- The criminal activities in your area of residence
- Your claims history, especially a liability claim.
- If the house you own has a history of claims
So, by how much will homeowners’ increase after a claim? There is no straightforward answer for that. It depends on your insurer and other considerations, like:
- The type of claim you’re filling
- Your area of residence
- Your claim history
- The extent of the damage
How Long Will the Insurance Rate Increase Last?
As earlier established, some factors determine the premium increase. If these factors change, then your rate will too. In other words, the increase in insurance is not permanent.
Record of claims only stays effective for about 3-7 years, 5 years in most cases, depending on your insurer. After that, if further claims are not made, your premium will be reduced. However, the rate will not be the same as before you filed a claim.
Instances Where Filing a Claim Will Not Increase Homeowners’ Insurance
In the same way, your insurer can increase your premium after a claim., there are certain situations when they are not allowed to do that. This is because of the consumer protection law operating in each location to bring order and regulations. In situations when:
- A policyholder files for a single claim
- A policyholder only inquires about a claim but doesn’t file for one
- The claim results from weather damage or natural disaster.
- A policyholder files for a claim but is denied settlement
Filing for a claim is your right as a policyholder. You should ensure to insure your home with an agency that puts your interest above theirs. Contact our team of insurance experts at Young Insurance Agency for all your queries related to homeowners insurance. We can help you understand the situations when your homeowners’ insurance rates can increase.