Woman holding fan of $100 and $50 bills

Dear Insurance Adviser,

We filed a home insurance claim for storm damage. If we return the insurance money for items we don’t wish to fix, will that help keep down our premiums?

— Merrie

Dear Merrie,

No, returning part of the payment from a home insurance claim will not hold down your premiums.

First, most insurance companies don’t hit homeowners with a surcharge following a claim. This is unlike car insurance, which does impose a surcharge for at-fault accidents.

Second, even if your insurance company were to increase rates for homeowners claims, the increase would happen regardless of whether you send the money back because insurance companies put more weight on how often you have claims rather than how much is paid. (It’s a matter of frequency, versus severity.)

So, returning part of your payment affects only the severity of your claim but doesn’t eliminate the fact that you had the claim in the first place.

Third, home insurance policies pay for the replacement cost of any storm damage only if you actually have the work done. Typically, the insurer will write you an initial check to cover the depreciated value of your roof and whatever else sustained damage and won’t pay the difference until the work is completed. The completion must occur within one year.

So, you might want to rethink your decision not to have some of the work done, since you have been paid for only a portion of the repairs. If you want to be fully paid, you will need to have the work completed.

I hope this helps.

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