Does Home Insurance Premium Increase After Claim?

When you buy a new house or move into a new home, it is advised to have homeowner insurance. Now you’d think, why is homeowner insurance necessary?

This is because a homeover insurance provides you with protection against any uncertain loss in or to your home such as fire, theft, water damage, etc.

Your home may be the costliest thing that you own and having protection against such uncertain situations is a must. But does the home insurance premium increase after you have made a claim? Yes, it does. So what are the reasons due to which insurance companies increase your home insurance premiums after claims?

Let’s find out!

Why Do the Claims Increase the Home Insurance Premiums?

Insurance companies try to calculate the risk involved by estimating the premium cost as per the estimated risk. When an insurance policyholder files a claim and recovers the amount from the insurance company, the insurer evaluates this policyholder to be at a higher risk. Therefore, they increase the premium amount after the claim has been made.

Now, what makes the insurance company assume the home insurance policyholder to be at higher risk after the claims? The answer is in the reasons listed below, which state that if the policyholder has claimed once due to certain reasons, there are chances that he may again have to claim the insurance-

  • The policyholder might be living in an area that has severe weather causing weather-related damage such as water damage
  • The policyholder may be living in an area with a higher crime rate; thereby, increasing the chances of theft, loot, etc.
  • The policyholder might have made several claims in the past for his/her home, thereby, making the policyholder a riskier client than others

How Much Do the Premiums Increase After the Claims?

Generally, the increase in the premiums after the claims are temporary and are reduced after a certain period. However, there can be a few exceptions to this, such as if you make more claims frequently, your premium may not reduce.

Several factors as listed below determine how much the premiums can be increased after the claims-

  • Type of claim you have made
  • The extent of the damage and therefore, the amount claimed from the insurance company
  • The area where you live and the risk involved with your property
  • Your claim history, i.e., how many claims you have made and in what period

The area where you are residing can be a bigger factor because when an area is hit by a natural disaster such as an earthquake or a storm, several people make claims from the same area. Therefore, in that area, insurance companies can increase the home insurance premiums substantially; however, it is done only if the state allows it.

Do Insurance Companies Always Increase Premiums After Claims?

No, the insurance company does not always increase premiums after you have made claims from your insurance company. Although the increase in the premiums is generally temporary, it is still possible that insurance companies do not or cannot increase the premiums after the claims every time. Since the insurance companies are regulated at the state level, there are certain things they can or cannot do. For example, it may be possible that they are not allowed to increase the claims after a natural disaster.

Apart from the natural disaster, your insurance premium will not be increased in the following cases:

  • When you have just inquired and did not claim the insurance money
  • When the claim is denied by the insurance company
  • When you have filed just a single claim

You can contact your insurer or ask a professional about the terms and conditions. You can also discuss the laws that are there for the protection of the consumers in your state.

Conclusion

If you are wondering whether the insurance companies increase the home insurance premiums after you make a claim or not? The answer is yes, they can increase the insurance premiums after the claims. Several factors can decide whether insurers increase the insurance premiums or not and how much the increase will be, if they do. However, they cannot increase the premiums every time you file for a claim and even when they do, the increase is only for a limited period.

FAQs
Can insurance companies increase home insurance premiums after the claims?
Yes, the insurance companies can increase the home insurance premiums after the claims. However, they don’t always increase after a claim has been made but they can when they estimate the risk to be higher.
What are some of the factors due to which the premiums can be increased?
Some of the factors that can lead to the increase in the premiums after the claims are:
  • Type of claim
  • The extent of the damage
  • The area where you live
  • Your claim history
There can be other reasons as well but the ones mentioned above are the most common factors that lead to an increase in home insurance premiums.
Is the increase in the home insurance premium permanent?
No, the increase in the home insurance premium isn’t permanent and generally, the premiums are generally reduced to the original amount after some time.
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