How Claims Affect Homeowners Insurance Premiums

Owning a home is a big achievement especially in these economic tough times. Many homeowners are however faced with paying of insurance premiums on their property,but at times there are claims that can cause a steep increment in the homeowners insurance premiums which any property owner must try and avoid. The claims that will affect a homeowners insurance premiums are as follows.

Multiple Claims: If there are many claims made against ones homeowners insurance policy, such claims include slip and fall, a dog bite or a claim caused by faulty plumbing; then this can lead to very high premium rates or much worse. The insurer of the property may cancel the individuals insurance policy and report such claims to the Comprehensive Loss Underwriting Exchange (CLUE).

Marked: CLUE has an insurance database that is shared by agencies,  which means that these agencies share general information about homeowners whose claims are higher than usual. If a home owner’s rates go up because of excessive claims an the insurer refuses to renew the insurance policy with the homeowner, then any agency that the homeowner will try to get insured with will be able to track the history of claims from the database and charge the person accordingly.

Rates Increment: When a homeowner has many claims, this may trigger an increase in the premium rates. It is better if the homeowner is able to pay for cost for minor losses, rather than file in a claim.

External Claims: The homeowner can also have many claims due to the excessive claims that their neighbors file in, this will definitely increase the number of claims on the property and as a result will trigger a rate increase. This means that it is better to look out for areas that may need repairs that are affecting neighbors. Sometimes it may just take a few repairs or fix something that will make the neighbors file in a complaint, which in return will translate into an increase in rate of the premium on the property.

Precaution: The best way to avoid those unnecessary cost increases that will surface later is to take some precautions. The homeowner should look around their property and look out for areas that might lead to injuries or damages. After doing a critical survey of the property then one should take preventive steps, such as installation of smoke detectors in case of  a fire, and proper security systems. This is safer than waiting for a problem to occur in future which will affect the homeowners insurance premiums by shooting the rates higher than usual.