When Filing a Claim on Homeowners Insurance Raises your Rates

You call your insurance agent and tell them about the lightning bolt that struck the power pole outside your home last night. The lightning coursed through the electric lines and damaged several items in the home. You are told that the damage will be covered and to get together a list of items that were damaged to submit to the company. After hanging up the phone the thought hits you, will this raise my insurance rates?

Unfortunately, there is no one size fits all answer to this question. Every insurance company has a different policy concerning what constitutes a chargeable claim. A company might not have any surcharge no matter what sort of claim is filed. Another may place an extra charge on the policy regardless of the circumstances. Or, you may have a policy that has had a claim free discount and you will see that removed from the policy.

A common view of the claim surcharge would be to ask who or what caused the loss. If the loss occurred because of the actions of another party (a neighbor child hitting a baseball through your living room window) an insurance company may decide not to hold it against you. Another common exception to the claim surcharge is for an act of God. An act of God would be a weather related loss. Damages caused by the afore mentioned lightning strike or a strong wind that tore shingles from your home’s roof would fall under this. If you had frequent losses from the same type of claim (multiple lightning strikes) you will find that a surcharge can still be applied when one normally would not be or you might have your policy cancelled for claim frequency.

The best time to find out if filing a claim will raise your rates is when you are getting quotes for insurance. The insurance agent can explain the company’s claim policy or can look up information on it for you. During the application process you will be asked if you have had prior insurance claims. Keep in mind, if you ask several detailed claim questions or scenarios, this may prompt more questions about prior claims.

Unfortunately, there is not much you can do once the insurance company decides to surcharge your insurance policy. The rates are filed with the state that they do business with and there is not any flexibility for them to negotiate the premiums. You may be able to shop around when your policy renews to find a better rate. Be up front with the agent. Insurance companies do share claim information with one another. If an unreported claim is found by the insurance company when the application is sent in, they will either place their own surcharge on the policy, or reject it for misrepresentation.