A Home Insurance Claim: To File Or Not To File


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Insurance is designed 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 could 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?

Some insurance companies may protect you against premium increases. In Texas, insurance companies are prohibited from increasing rates following a first claim. However, if it means your premium will rise, you may need to decide whether it makes sense to file a claim.

Filing a claim may not be beneficial if:

  • 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.

Consider this: you may want to file a claim (regardless of dollar amount) to protect yourself if someone is injured on your property and they sue you.

  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 2017 FMG Suite.