Homeowners Insurance: How to Know When to File a Claim

Justin Lopez July 8th, 2024

For homeowners, insurance serves as an important safety net that shields them against unexpected financial losses. But is it really meant to protect you from any and all losses? When contemplating whether or not to file an insurance claim, consider that in some cases it may be in your financial interest to refrain from doing so.1

According to a recent study, the national average premium increase after filing a homeowners insurance claim was 9%. While this number varies based on your specific location, it offers some insight into the potential financial consequences for homeowners.2

What About My Premium?

Some insurance companies do offer certain protections from premium hikes. However, if filing a claim will result in an increase to your premium, it’s crucial to consider whether it makes sense long term.

Here are some instances when filing a claim might not be beneficial to the homeowner:

  • The claim amount is very small. Insurance policies have deductibles that require the policyholder to pay a certain amount before a claim is covered by insurance. Depending on your deductible, even claims ranging from $1,000 to $2,000 may not have a favorable long-term cost benefit.
  • Lack of coverage for a specific loss. Be sure to familiarize yourself with the specific terms of your policy to determine what is and is not included in your coverage. The simple act of filing a claim (even one that is not paid out) may result in an increase to your premium.
  • You have recently filed a claim. All previous claims are recorded and tracked in an industry database for seven years. Filing multiple claims over a shorter time period can often lead to higher premiums.

While it might not always make the most financial sense for you to file a homeowners claim, there are certain circumstances where you may still want to file regardless of the amount. For instance, if someone is injured on your property, insurance can help you protect yourself from further financial burden in the event that the injured party decides to sue you.

If you are unsure whether filing an insurance claim is the right financial decision, I encourage you to consult with an advisor who can help you navigate the implications and keep you on track towards your long-term financial goals.

1Several factors will affect the cost of homeowners insurance, including the location, size, and contents in the home. You should consider the amount of your deductible and level of coverage before purchasing a policy. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

2InsuranceQuotes.com, 2022

Read More By Justin Lopez, AIF®

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Investment advisory services are offered through Concord Wealth Partners, an SEC Registered Investment Advisor.

Join The Conversation

Contact Us

Give us 15 minutes to listen to your situation, then we will connect you with an advisor ready to help you reach your financial goals.

This field is for validation purposes and should be left unchanged.