A Home Insurance Claim: To File Or Not To File

Insurance is meant to protect you against financial loss. But is it really meant to protect you from any and all financial loss? When it comes to filing a loss claim on your home insurance, there may be times when not filing may be the wisest course of action.¹

According to a CNN Money report, filing a single claim, on average, will result in a 9% increase in your monthly premium. And, if you file a second claim, your premium will climb an average of 20%.²

What About My Premium?

While some insurance companies may protect you against premium increases, or if you reside in Texas (the one state that prohibits a rate increase following the first claim), you may need to decide whether it makes sense to file a claim if it means your premium will rise.

It may not pay to file a claim when:

  • The claim amount is small. Your policy will have a deductible, so even claims of $1,000 to $2,000 may not have a favorable long-term cost-benefit.
  • You’re not covered for a loss. Read your policy first to determine coverage. The simple act of filing a claim (even for a claim that won’t be paid) may result in higher premiums.
  • You have filed a claim within the last seven years. Since previous claims are tracked by an industry database for seven years, it may result in higher premiums.

Another factor to consider: you may want to consider filing a claim regardless of dollar amount if someone is injured on your property in order to protect yourself in the event that you are sued by the injured party.

  1. Several factors will affect the cost of homeowner’s insurance, including the location, size and contents in the home. You should consider the amount of your deductible and level of coverage before purchasing a policy. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.
  2. CNNMoney.com, June 17, 2015

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2016 FMG Suite.