Homeowners Insurance Claims
Some homeowners make the mistake of using their policy much like a checking account from which they withdraw for relatively minor expenses. Though your policy may cover such expenses, home insurance is really only intended to give you financial protection in the event of major disasters. Even if you always pay your premiums on time and your inquiry is valid, just the act of filing can profoundly impact how much you pay for the plan down the road and reduce the number of insurers that are willing to provide coverage to you.
Good providers come through when you need them the most, but they don't like claims because they cut into profits. More and more insurers are now unwilling to cover homeowners with any claims in their history, irrespective of the severity of the damage. Thus, it's fairly common for a policyholder to see a dramatic rise in premiums or to get a notice of non-renewal in the mail after filing. This is, in part, due to the recent spate of natural disasters. These colossal losses for insurers have made having a policy a luxury that only homeowners who don't make claims can enjoy.
Homeowners Claims vs. Out-of-Pocket Payment
Before you have to make the decision to file or pay out of pocket, you should determine now what you would be willing to pay on your own. You can start with your deductibles. If you have a deductible of $1,000, for instance, you can simply determine if the damages would cost you more than $1,000 to fix. In the same vein, increasing your deductible from $500 to $1000 will save you an average of 25% on your premiums. If you are savvy, you will raise your deductibles and put the savings in an account from which you can later withdraw instead of making small claims against your policy.
Much like car insurers examine your driving record to set your premiums, home insurance companies look at a similar record for your home. This record reveals all reimbursements that have been approved or denied. The database that contains this information is called CLUE (Comprehensive Loss Underwriting Exchange), and almost all home insurers subscribe to it. Even if previous owners made the claims on the house, you will still be financially penalized for them by home insurers. Your best bet is to try to keep your home as claim-free as possible.