The Effect of Claims on Homeowner's Insurance

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A claim can have a number of different effects, both positive and negative, on your homeowner's insurance policy. Learn about the effect of claims on homeowner's insurance with help from an assistant professor of insurance at The American College in this free video clip.

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Video Transcript

Hello, my name is Kevin Lynch, I'm an assistant professor of insurance at The American College in Bryn Mawr, Pennsylvania. Right now, we're going to talk about what is effect of claim on a homeowners policy. And with many questions like this in insurance, the answer begins with, it depends. And it really does, because it depends on the scope and the nature of the claim that we're talking about. Homeowners insurance covers many different things in one policy, it covers the structure itself. So, is the claim, damage to the structure? The second thing it covers is, personal property on your premises, was something lost or stolen? The third thing it covers is, liability. Did someone come and slip and fall on your sidewalk? And lastly, there's also medical payments coverage that are a part of your homeowners policy. So, the question is, what kind of claim is it, on what part of the policy. As a general rule, claims on any insurance policy subjects the policy holder to increase premiums upon renewal, or even selection for non-renewal. The size of a claim however, is not as important as the frequency of claims made. As an example, if your home is damaged severely during a hailstorm, requiring a new roof and a replacement of numbers of broken windows. Even though the claim amount is large, the chances are pretty good that you won't get a rate increase, because that loss was caused by an act of God. However, if you have a dog, and your dog bites people on more than one occasion. you will most likely be non-renewed. Or, if renewed, the coverage for a liability from dog bites will be excluded. Another important consideration, is multiple claims. If you are what they call, a claims happy policy owner, filing claims frequently, especially for losses that are only slightly higher than your deductible. You will most likely be non-renewed for excessive claims frequency. In the years I practiced as a property and casualty agency owner, I always encouraged my clients to get an estimate for damages incurred on their property. And to consider carefully, whether they wanted to risk premium increases over a couple of hundred dollars in reimbursements. Basically, I counsel my clients to save insurance claim dollars for the big stuff. The number one reason for buying an insurance policy of any kind, is for quality claim service. Keep that in mind as you consider one company over another. It's not the small amount of premium savings that will be important to you, on the day that you file your claim. It'll be the quality of your claim service of your provider. I'm Kevin Lynch with The American College in Bryn Mawr, Pennsylvania. We've talked about the effect of a claim on your homeowners policy. For more information, go to Thank you.


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