The Effect of Claims on Homeowner's Insurance

You've paid your insurance premiums. Now you want to make a claim. Before you do, consider the effect of claims on your homeowner's insurance policy.

Consequences

Multiple claims against your homeowner's policy can lead to higher premiums or worse---your insurer may cancel your policy and report the claims to the Comprehensive Loss Underwriting Exchange (CLUE).

CLUE Defined

CLUE is an insurance database that is shared among agencies. This means if your rates go up because of excessive claims or your current insurer refuses to renew your policy, any agency you approach for a new policy can track your claims history and charge you accordingly.

Effect on Rates

Any claim may trigger a rate increase. For this reason, consider paying the cost of minor losses out of your pocket.

Neighbors' Claims

More than just your claims can affect your insurance rates. Excessive claims filed by your neighbors may also trigger a rate increase.

Plan Ahead

Sometimes the best way to avoid unnecessary cost increases later is to take proper precautions now. Look around your property with a critical eye. Consider possible hot spots for damages or an accidental injury. Take preventive measures, such as adequate smoke alarms and a working security system.

References

• MoneyWatch.com: How to File a Homeowner's Insurance Claim
• Investopedia: Will Filing an Insurance Claim Raise Your Rates?