When It Doesn’t Pay to File a Home Insurance Claim

Learn when it may not make sense to file a claim on your home insurance.

Sourced from: www.soundcrestfinancialservices.com

When buying home, it’s standard for lenders to require that you purchase home insurance.  It is meant to protect you against financial loss in the event of a fire, accident, or theft.  There are some cases, however, where filing a claim on your home insurance may actually not make the most financial sense.  If your premium is going to jump, then consider whether filing the claim is really worth it.

Some insurance companies and some states prevent premium increases following a first claim.  If that’s not the case, though, you will need to decide what your best course of action is.  Take special consideration in the following cases:

• If your claim amount is small, consider what your deductible is.  Claims of $1,000 to $2,000 may not have a desirable long-term cost benefit if your premiums end up making a big jump.
• If you’re not covered for a certain loss.  Sometimes just filing a claim (even if it’s not covered or going to be paid) can cause your premium to increase.  Do your research on what is covered by your policy before filing a claim.
• If you’ve filed another claim in the last seven years.  Claims are tracked by an industry database and too many claims one one policy may result in a higher premium.

One more thing to consider: if someone was injured on your property and you are worried you may be sued, you may want to file a claim regardless of the dollar amount.  An insurance claim, in that case, may help cover the costs of litigation.