Having a homeowners insurance policy offers peace of mind. If your house sustains damage or is destroyed by a covered peril, your insurance company is prepared to reimburse you for the cost of repairs up to the limits of coverage you carry on your policy. Before you file your claim, you might wonder how it affects your premium. Bankrate investigates whether your homeowners insurance premium increases after a claim, and if so, how long the rate hike lasts.

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How much does your homeowners insurance increase after a claim?

Filing a home insurance claim may cause your premium to increase temporarily, but there are some exceptions. According to a survey conducted by Consumer Reports, half of those who filed a claim with their homeowners insurance company saw an increase in premiums. Of those, 12 percent experienced an annual increase of $200 or more.

The amount your premium will increase after a claim depends on a variety of factors, including:

  • Type of claim
  • Extent of the damage
  • Where you live
  • Your personal claims history

It is also possible for your home insurance rate to increase based on the frequency of claims in your area. For example, after a major hurricane that causes extensive damage in your community, your insurance rate might increase more substantially than it would if you filed a single property damage claim.

Why do insurance premiums go up after filing a claim?

Homeowners insurance rates often increase after a claim because it leads your insurance company to believe that you are more likely to file another claim in the future. This is especially true for claims related to water damage, dog bites and theft. To compensate for another potential claim payout, the property insurer proactively raises your premium.

As mentioned, whether or not your insurance premium increases after a claim is situational. Certain types of claims affect insurance rates more than others. You should expect your rate to go up after a claim if you fall into any of the following categories:

  • You live in an area with severe weather
  • Your home is located in a high-crime area
  • You have filed liability claims in the past
  • You own a home with a history of claims
  • You file more than one claim over several years

Generally speaking, your insurance premium is more likely to increase if you file a liability claim rather than a property damage claim. With a liability claim, there is a chance that you could face a lawsuit. Legal fees and court settlements can be very expensive, which means there is added risk for you and your insurance company.

How long does a claim affect home insurance rates?

If your homeowners insurance rate increases after a claim, know that it is not a permanent rate hike. Most claims stay on your record for roughly five years. However, this depends on the insurance company. A claim could remain on your record for as little as three years or as many as seven years. After that time, your premium will go back down, although it may not return to the original rate.

Learn more: Affordable home insurance companies

Are there times when companies are not allowed to increase rates after a claim?

There are many situations when property insurance companies can raise your rate after a claim. But there are also certain situations when an insurance company is not allowed to increase your rate. Because insurers are regulated at the state level, consumer protection laws vary based on your location.

Some of the situations that prohibit insurance companies from raising premiums include:

  • When a homeowner inquires about filing a claim but does not submit one.
  • When a homeowner files a claim that does not result in a payout (denied claim).
  • When a homeowner files a single claim.
  • When a homeowner files a claim due to natural disaster damage.

As a homeowner, it is important to understand the consumer protection laws in your state. You can contact your state’s department of insurance to learn more about the restrictions where you live. You can also contact your insurance company to find out what situations are exempt from rate changes.

Frequently asked questions

    • The best homeowners insurance company is different for every homeowner. It depends on where you live, what type of policy you want, how much coverage you need and your budget. Before purchasing a policy, take the time to shop around and compare insurers. Get a few quotes from several property carriers to see which one can offer the best price.
    • In the U.S., the average cost of homeowners insurance is $1,383 per year. However, every homeowner pays a different rate. Personal factors like your age, credit score and claim history impact your rate. Insurance companies also consider characteristics of your home – such as square footage, the year it was built and the overall condition – when estimating your premium. Additionally, location is a factor. For example, your proximity to a fire station.
    • Homeowners insurance is not legally required in any state. However, every homeowner should consider purchasing a policy for financial protection. Without it, you are financially responsible for making any repairs and replacing damaged personal property. If your home is destroyed by a fire or extreme weather event, you would have to pay for the full cost of rebuilding. Additionally, if you have a mortgage, most lenders typically require that you have property insurance.
    • Whether your homeowners insurance premium goes up after you file a claim depends on a few factors. One of those factors includes the type of claim you file. Generally speaking, liability claims, water damage and theft will impact your premium more than a property damage claim. Furthermore, a new claim may have a more significant impact on your premium if you live in an area that experiences extreme weather, in a neighborhood with a high crime rate, or have filed claims in the past.