As a homeowner, one of the most important things to do is take out a homeowner's insurance policy. Over time, you may find yourself in a situation that requires you to make a claim on your homeowner's insurance. Before making the claim, take a few moments to evaluate whether or not it makes financial sense to make a claim against your insurance.
1. Know Your Deductible
The deductible is the amount that you must pay before your home owner's insurance provides coverage. For example, if your deductible is $1,000 and your claim is for damage that equals $5,000, you pay $1,000 and your homeowner's insurance company pays $4,000.
When you took out your home owner's insurance policy, you selected the amount of the deductible. Generally, the higher your deductible, the lower your insurance premium.
If the cost of the damage is just barely over your deductible, it doesn't make sense to make a claim. Save the claim for a more significant event.
2. Consider Increases in the Cost of Your Insurance
It is not uncommon for your insurer to increase the costs of your insurance policy after a claim. However, the type of claim that you make also influences possible premium increases. For example, a majority of insurance companies do not increase your premiums after a single weather related claim. You have no control over the weather, and such claims are generally unavoidable.
Unfortunately, the same cannot be said for liability claims for personal injuries that occurred on your property. On average, insurance premiums rise 14 percent. Other costly claims include those related to dog bites and water damage. Claims where you bear a portion of personal responsibility are more likely to cause a hike in your premiums.
It is also possible that your homeowner's insurance company may cancel your policy completely after a claim. You do have the ability to dispute this.
Even if you switch companies, a national database provides the new company with information concerning previous claims.
3. Look at Your Customer History and Relationship with Your Insurance Company
One claim usually does not increase the cost of your homeowner's insurance if you are an established customer. If you make two claims in a three year period, this can cause your insurance costs to increase.
Some companies may allow you to make a penalty-free claim if you have a certain type of policy or have been with them a specific amount of time. Inquire with an insurance company, like Estabrook & Chamberlain Insurance Inc, to see if it offers any such programs.
Before you make a claim on your homeowner's insurance, do the math so that you can make an informed decision. A bit of research lets you know what to expect if the claim is a wise choice for your situation.