Does Home Insurance Increase After a Claim?

Home insurance provides crucial financial protection against unexpected damage, yet a common concern for policyholders is how filing a claim might affect their future costs. Insurance providers continually assess risk, and a policyholder’s claims history plays a significant role in that evaluation. Understanding this relationship can help homeowners make informed decisions about their coverage and when to file a claim.

The Direct Impact on Premiums

When a homeowner files a claim, insurers often view this as an indicator of increased future risk. This typically leads to a premium increase at the time of policy renewal. Insurance companies use past claims data to predict the likelihood of future claims, and a recent claim suggests a higher probability of subsequent incidents.

This re-evaluation of risk translates into higher premiums as insurers aim to offset potential future payouts. While a minor claim might lead to a modest increase, more significant claims or a history of multiple claims can result in substantial adjustments. On average, homeowners might observe a premium increase ranging from 10% to 50% after filing a claim, though this varies based on the claim’s nature and severity.

Key Factors Influencing Premium Adjustments

Several specific variables influence how much a home insurance premium increases after a claim. The type of claim filed can significantly impact the outcome, with liability claims often leading to larger rate increases due to their potential for high costs, including legal fees and settlements. Claims for preventable incidents, such as certain types of water damage or accidental fires, may also result in more substantial increases compared to those caused by unavoidable events like natural disasters.

The frequency of claims is another factor. Filing multiple claims, even for small amounts, signals a higher risk to insurers. A history of frequent claims, particularly within a short period, can lead to steeper rate adjustments or even make it challenging to secure future coverage.

The total amount paid out for a claim also plays a role, as more expensive claims generally correlate with higher premium increases. Property location, including its susceptibility to severe weather or higher crime rates, can interact with a claims history to influence premium adjustments. Insurers also consider the policyholder’s overall claims history, including claims made with previous insurers, and their own specific underwriting guidelines.

Understanding Your Claims Record

Homeowners’ claims history is formally tracked through the Comprehensive Loss Underwriting Exchange (CLUE) report. This report, maintained by LexisNexis, serves as a centralized database containing detailed information about past home and auto insurance claims. When a claim is filed, the insurance company typically reports the incident to CLUE, regardless of whether the claim was paid or denied.

A CLUE report includes policy information, dates of loss, types of losses (e.g., fire, theft, water damage), and the outcome and settlement amount of each claim. Claims generally remain on a CLUE report for five to seven years. This claims record can impact renewal rates with a current insurer, the ability to obtain new insurance policies, and the rates offered by other insurers. Homeowners are entitled to a free copy of their CLUE report annually under the Fair Credit Reporting Act, allowing them to review its accuracy.