Claims that Boost Your Insurance Rates

I think everyone knows that certain insurance claims have a tendency to increase your premium. What are they? Here's a list from Bankrate on a few claims that will increase your homeowners insurance:

Bowen says that making two claims in a three-year period is more likely to trigger a hike, although each company is different.

Dog bites. A single attack is often likely to result in higher premiums.

Water damage. Water damage tends to set off a barrage of red lights for insurers, largely because of the costs of eliminating mold.

Slip-and-fall claims. Slip-and-fall injuries, according to the National Safety Council, are the single largest cause of emergency room visits. If someone hurts themselves on your property and files a claim with their insurance company, your rates may rise.

And here's what can raise your car insurance rates:

Factors that may be considered include whether you were driving while drunk, whether injuries incurred, and the severity and type of accident.

The piece advises only filing a claim when it's a major one. Here's the rationale they use in saying so:

It gets back to the notion of what insurance is all about: bailing you out from a large disaster, rather than the small things that annoy rather than harm.

A few thoughts from this on me:

1. I agree with them 100% on when to file a claim. If we have any minor damage, we always pay for it ourselves. Insurance claims are for major (over $2,000 for us) damage.

2. As such, we've raised our deductibles as high as possible. Doing so saves us a ton of money on our insurance premiums.

3. If you decide to do this as well, be sure to up your emergency fund so you have enough to cover the deductible in case a major accident occurs.

4. Just another expense of having a dog. Sorry, I couldn't help but throw that one in. ;-)

Comments

[Outdoorgrrl]

I completely agree with you on raising your deductibles as high as possible. I would just caution people to think about what might happen if more than one insurance-worthy emergency happened. Last December, our house was robbed and the windshield on my car cracked. One deductible at a time is fine, but two stretched our budget!

[Mr. Stupid]

Major damage != $2,000, in my opinion, especially when it comes to houses.

Heck, my deductible is $2,000, so only catastrophic events will trigger an insurance claim. I'm sure my insurance company is just fine with this arrangement, which is why I only pay them $600 per year.

[Becky@FamilyandFinances]

As someone who's worked in the insurance industry, a claim like a dog bite is very likely to get you cancelled by your insurance company. Usually your only choice then is to go with a high risk insurance company. It's usually more than double the rates.

Multiple claims can also get you cancelled, even little claims. I had clients that that happened to. They filed a bunch of little claims and next thing you know they had to go to a high risk insurer and their premiums went from $300/yr to $1500/yr - with a higher deductible to boot. They definitely learned their lesson the hard way - don't file little claims!

[Erik]

I'm a claims adjuster and all I do is homeowner's claims. I can tell you that a dog bit most likely won't raise your premium. Rather, it will get your policy dropped. Insurance companies don't like dogs with bite history, so they'll most likely just pay the liability claim and cut you loose altogether.

I haven't worked much on the sales and underwriting side of the business, but I do know that homeowner's insurance is MORE about claim frequency for non-weather related claims. If you had a theft claim, water damage claim, and fire claim all within the last two years, you'll most likely be reviewed for non-renewal.

Of course, every company is different and has different underwriting guidelines. But, I agree with you FMF, if you want to keep your homeowner's policy and possibly keep the rates low, don't file the small stuff. It's not worth it.

[Matt]

I wonder if anyone knowledgeable about it could comment on whether it's a good idea to file chipped windshield auto claims. I'm talking about the kind of minor damage that can be repaired for $50.

The impression I've always gotten is that this is an exception to the don't file small claims rule, because it keeps the damage from spreading and causing a larger claim later (full windshield replacement).

[Dave]

As an employee for a major property/casualty insurer, I have studied insurance for almost 10 years. The rule of thumb has always been to insure low frequency, high severity losses.

Anything else should be insured through your emergency/contingency fund. As for submitting low dollar claims on insured property, I'd agree with the majority . . .you're better off waiting to submit a claim until you experience a high dollar loss.

[publicadjuster01]

Many people fear that filing insurance claims will cause them to be "blackballed" by insurance companies, resulting in higher premiums, loss of coverage and difficulties obtaining new insurance.