The Home Insurance Dilemma: 5 Claims That Affect Your Premiums

Homeowners insurance helps consumers to avoid dealing with out-of-pocket expenses in the case of a major (or minor) catastrophe, but whenever one actually occurs—the pipes freeze, or the washing machine floods the floor—consumers are always faced with the same dilemma: to claim or not to claim. Do you make a claim and risk raising your premium rates, or do you pay for the damages yourself?

“With the many changes in the personal insurance market over the past few years, insurance underwriters will be particularly critical during the renewal process for homeowner policies,” says Scott J. Congiusti, assistant vice president and personal insurance claims director with HUB International Northeast in New York. “Any indication of claim activity will pique a bit of interest, and frequent or ‘frivolous’ claim activity can provide reasons for nonrenewal of your coverage.”

So when should you file an insurance claim and when is it a good idea to just bite the bullet and pay out? To help out your homebuyers, here is what they should if they find themselves in any of these five common situations.

  1. Leaky roof

Besides leaving blemishes on your wall or ceiling, a leaky roof can cause serious damage. If left untreated, you risk finding a gaping hole in your roof. “Even though the resulting damage from a leaky pipe or roof is typically covered by insurance, the cost to repair the cause [of the leak] would be an out-of-pocket expense,” says Congiusti. In most cases, a leaky roof is one repair you should pay for yourself.

  1. Damage from a natural disaster

If Mother Nature brings a catastrophe to your home in the form of a tornado, earthquake, flood or hurricane, for example, it is usually a good idea to file an insurance claim – if you have the right coverage. Claims that result from a tornado, hurricane or other natural disaster don’t affect your policy renewal as much. It advised to save insurance for a big disaster to keep your deductible high and to not file small claims.

  1. Burst pipes

In winter, poor home insulation can cause things like irrigation and plumbing systems to wreak havoc on your home. A common problem on cold days is exploded pipes, which can leave you with a very wet and messy situation. “In my experience, it is best to utilize your policy for losses that you cannot financially absorb on your own and require the specialized assistance of a claims professional,” advises Congiusti.

  1. Injury on your property

Another tricky scenario would be if an injury, such as a dog bite, takes place. Professionals recommend submitting for coverage. Submitting a liability claim will provide coverage for your legal defense too.

  1. House fire

If a house fire takes place, it all comes down to who or what may be its cause. If you think the fire may have been your fault, Congiusti advises to think more than once before filing a claim. Always assess the situation. Is there a responsible party, such as a manufacturer of a defective appliance or similar, that the carrier can go after, or was the fire caused by a candle you forgot to blow out before leaving home? Consider filing a claim if you feel that someone or something else is at fault.

Do you have any additional advice? Have you ever been in a situation where you decided not to file an insurance claim or did file and felt you shouldn’t have after the fact? We’d love to hear your experiences and tips.

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  • Tom H

    This looks like good information to pass along to my clients.