Does Filing an Insurance Claim Automatically Raise Rates?

1/6/2021 (Permalink)

Your first thought after a disaster happens to your home may be about filing an insurance claim in Miami Shores, FL. It’s a reasonable thought! However, before you do, you should consider several factors, including

• The cause of damage
• The amount of damage
• The size of your deductible

Why Does the Cause of the Damage Matter? 

Many reasons! First off, the nature of the claim is extremely important to insurance actuaries. They combine quite a few factors to make a judgment about how many claims you’re likely to have, as well as how much damage is typical.

If you file an insurance claim for a dog bite on your property, that’s a perfect example of a claim that scares insurance companies. A dog that bites a human once is much more likely to bite again, according to statistics, so it’s highly likely to raise your rates. Other red flags can include

• Slip-and-fall claims
• Water damage
• Black mold

Another example is a home flood. Standard homeowner’s insurance does not cover damage from a flood that enters your home from outside. Yet even though the damage isn’t covered, trying to make a claim could still potentially raise your rates if insurers believe you’re in a high-risk zone.

What About the Deductible and Amount of Damage?
Filing a claim for small amounts of damage is usually a bad idea. Often, your damage deductible will be higher than small claims anyway, so before you even consider doing it, read your policy to determine where the reimbursement kicks in.
The number of claims made on a policy is a major determiner of rate increases. It often doesn’t pay to have a low deductible, since the commensurate rate hike can eliminate any advantage you gain. Ideally, instead of a low deductible, put a couple of thousand dollars in an interest-bearing savings account and use it to pay an affordable, local restoration company to repair the damage.
Once covered damage types exceed around $2,000, an insurance claim may be worth it. Ideally, talk to your insurance agent before anything happens to get a sense of what types of damage you should make claims for.