What You Need To Know About Insurance Claims And Raised Rates

9/21/2021 (Permalink)

Learn more about Insurance Claims to protect your Emporia, VA home.

People purchase home insurance to protect themselves against risks like water damage, but is it wise to use your insurance or file a claim after every disaster? While it seems like you should be able to, using your insurance too often or at all can lead to rate hikes. Therefore, it is necessary to know when filing an insurance claim is worth the risk of increased premiums.

What to Know About Insurance Claims

The Cost of Using Your Insurance

Using your insurance policy will typically not cover the entire remediation or restoration expense for your property. In most cases, people have a deductible, the amount of money they must pay before they can tap into their policy. Therefore, while you might want assistance covering the costs of damages and repairs, consider the full expense, including your deductible.

If you have a $1,000 deductible, it is not worth filing a claim for anything less than that. Filing a claim for damage you will end up paying for only increases the risks of rate hikes. Instead of filing for every issue, use your insurance only when you need to, when the damage is extensive and far exceeds your deductible.

Why Insurance Rates Go Up

Your insurance premiums or rates have to do with risks. If you file claims willy-nilly, the insurance company begins to look at you as increased liability, meaning it will probably increase your premiums.

Essentially, an insurance company is a for-profit entity, and it wants to make money off every client. Therefore, the company assesses the likelihood of clients making claims. Clients who are less likely to make an insurance claim receive better rates, while those who routinely use their policies will have higher premiums. In other words, the more you use your coverage, the more of a risk you are to the insurer.

Risks of Filing a Claim

Even clients who rarely use their insurance policies can be at risk of higher rates when they make a claim, depending on the claim and its preventability. Typically, insurance companies will not approve claims when the client is blatantly responsible. However, sometimes a client is responsible for the damage because of a lack of knowledge. An insurer might still cover damages, but it might reassess the liability the client presents.

Additionally, if you file multiple claims within a short period, your insurer might reassess your rates. The insurer is always evaluating clients and claims. Even if you rarely file a claim, the insurance company might reassess your profile, resulting in higher premiums.

When Should You File a Claim

You can file a claim when dealing with a significant disaster, such as a home flood from a burst pipe. When a claim is beyond your deductible, it is wise to file. However, you will also want to consider how many claims you have filed in the past because frequency can matter.

By all means, if you suffer a disaster, file an insurance claim and seek remediation and restoration through a licensed specialist, like SERVPRO, in Emporia, VA. However, just know that filing a claim can lead to higher premiums, depending on the circumstances.