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Homeowner Insurance Claims and Their Effect On Premiums by Brian Cartwright

Many clients are reluctant to report claims on their homeowner’s insurance policies. Their single greatest fear is that it will increase their future premiums. Whether or not your rates increase depends on multiple factors, including who your insurer is, how long you have been with them, what type of claim you are filing, and how many claims in the past that you have filed. Generally speaking, homeowner’s insurance claims based on weather-related events (e.g., tornado, hail, wind, etc.) typically do not result in an increase in your premium. Be advised, however, some carriers will increase your deductible when the Policy is renewed.

Going from a 1% to a 2% deductible may not seem like a lot, but it could mean the difference between whether or not you are having to pay for most, if not all, of a new roof in the event of a new claim. If the homeowner’s claim, however, is based on a plumbing leak or a slip and fall, your carrier may wind up increasing your rates when the policy is renewed and/or reduce your coverages. For example, if a water heater leaked, and you filed a claim, the carrier might increase your rates upon renewal as well as reduced the amount of coverage for such claims (e.g., decreasing your policy limits for such claims from $150,000.00 to $50,000.00). Amazingly, the insurance company might do this even if the amount of your claim did not even reach your deductible and the carrier had to pay nothing. If you do have a claim, it is imperative that when your policy is renewed that you carefully read the Declarations Page and your Policy to see if your deductibles were raised, any coverage were decreased, and/or your premiums were increased. You would be surprised how many times many homeowners do not look, throw their renewal Policy into a drawer, and then find out after a large loss that their homeowner’s deductible has been increased, coverage limits for the claim reduced, and/or their premiums had increased significantly. At the end of the day, before you experience any loss, you probably should contact your agent and ask them what situations could result in your premiums being increased and by how much. You should also ask them what duties you have under the Policy as to reporting claims, the effect of not doing so, and what provisions in the Policy that set your duties and responsibilities in the event of a claim. I would recommend documenting who you spoke with, the date that you spoke with them, and what the person told you.

Brian T. Cartwright is Board Certified in Personal Injury Trial Law by the Texas Board of Legal Specialization.