Can You Change Homeowners Insurance After a Claim?

Homeowners often consider changing insurance after experiencing a property claim. It is generally possible, but important considerations exist. Understanding these factors helps homeowners navigate the process.

Changing Insurers While a Claim is Active

Changing homeowners insurance during an active claim is not recommended. Your current insurer is responsible for managing the active claim, as the incident occurred while their policy was in effect. New providers are typically unwilling to assume responsibility for an ongoing loss that predates their coverage.

Switching insurers during an active claim can lead to complications and delays in the claim payout process. The original insurer remains obligated to process and settle the claim, even if you cancel your policy. This can create uncertainty and make securing new coverage difficult.

It is advisable to wait until your current claim is fully settled before exploring new insurance options. This ensures the claim is properly handled and avoids potential issues with future coverage. Once resolved, you gain flexibility in seeking alternative policies.

Changing Insurers After a Claim is Resolved

Once a homeowners insurance claim is fully closed and settled, homeowners are free to seek new insurance coverage. A resolved claim becomes part of your insurance history, which prospective insurers consider when evaluating a new application. This data helps them assess future risk.

A closed claim might lead to increased premiums upon renewal with your current insurer, which often prompts homeowners to consider switching. Insurers may view policyholders who have filed claims as having a higher risk profile. This can result in an adjustment to your premium at renewal.

The decision to switch after a claim settlement depends on your individual circumstances, including satisfaction with your current insurer’s handling of the claim. While a single claim might not always result in a premium increase, frequent claims can lead to higher premiums over time.

How Claims Influence Insurability

Insurers evaluate an applicant’s claim history to determine insurability and premium rates. A primary tool for this assessment is the Comprehensive Loss Underwriting Exchange (CLUE) report. Generated by LexisNexis, this report contains up to seven years of personal property claims history, providing details such as the date of loss, type of loss, and the amount paid. Insurers use this data to predict future claims, as past claims often indicate a higher risk.

The type of claim significantly influences how insurers view future risk. Claims related to water damage, theft, or liability (e.g., a dog bite or an injury on your property) often have a greater impact on rates than weather-related losses. Conversely, claims from catastrophic events might not impact an individual’s premium as heavily, though they can affect regional rates.

The frequency of claims is another important factor; multiple smaller claims can be viewed more negatively than a single, larger claim. Insurers assess both claim frequency (how often claims are filed) and severity (the financial impact of each claim). A high frequency of claims, even if individually low in cost, can signal a higher risk to insurers and potentially lead to higher premiums or difficulty securing coverage.

The severity or cost of the claim (the total financial payout) also plays a role in an insurer’s assessment. More expensive claims, particularly liability claims which can involve significant legal and medical costs, tend to lead to greater premium increases. The recency of a claim also has an impact, with more recent claims typically having a stronger influence on premiums for the first three to five years. Claims on a property, even those filed by previous owners within the past five to seven years, can affect your insurability and rates because they appear on the CLUE report.

Finding New Homeowners Insurance

When seeking new homeowners insurance after a claim, it is important to review your existing policy and understand the details of your previous claim. This includes knowing the claim type, the amount paid, and the date it was closed. Having this information readily available assists in the application process.

Shopping around for multiple quotes from various providers is a practical step. You can obtain quotes through online comparison tools, directly from insurance companies, or by working with independent insurance agents. Independent agents are particularly helpful as they represent multiple insurers and can compare options to find suitable coverage and rates.

Transparency about past claims is important during the application process. Insurers will access your claims history through databases like the CLUE report, so providing accurate information from the outset builds trust. When comparing quotes, look beyond the price; carefully review coverage limits, deductibles, and any exclusions to ensure the policy meets your needs.

To prevent any gaps in coverage, arrange for your new policy to become effective on the same day your old policy ends. A lapse in coverage can leave your home vulnerable to financial losses and may result in higher premiums or difficulty obtaining future insurance. Ensuring a seamless transition provides continuous protection for your property.