When it comes to homeownership, there are a lot of costs beyond your mortgage payment. Your homeowners insurance is one monthly expense that should be factored into your budget and that premium can go up pretty dramatically if you have to make a claim on your policy. How big of an increase you will experience often depends on the size of the claim as well as the type of claim you are filing.

Let’s have a look at how filing a claim on your homeowners insurance will impact your premium.

How will a claim impact my home insurance premium? 

According to the Insurance Information Institute, the average homeowners premium in the U.S. is currently $1,249. Insurers set a premium based on a variety of risk factors that you and your home present as well as the odds that you will eventually file a claim on that policy. Once you have filed a claim, your insurers will factor that into your risk profile and your rate will most likely be headed up.

While it can vary depending on the reason and circumstances of the claim, in general, you can expect a rate increase of 16% to 29% for a single claim according to Insurance.com. If you have a second claim within a year or two from the first, your rates may jump up 60%. The exact increase will vary depending on the claim type and amount as well as your claim history.

Types of claims that are likely to lead to a higher premium

In most cases, the more expensive the claim, the larger the increase you will see in your premiums. As an example, filing a claim for a $750 window will result in a much smaller premium increase than a $25,000 claim for major weather damage.

In addition to the amount, the type of claim will impact the premium increase as well. According to Insurance.com, a claim due to a fire would push up your premium by roughly

29%. A weather-related claim on the other hand would only increase your premium by 16%.

How long do claims stay on your insurance record? 

While it can vary by insurance company, in most cases, a claim will usually stay on your insurance record for five years. This means that you will most likely be paying a higher premium for those five years, until the claim falls off your insurance record. If you have to file another claim within those five years, you could see a massive increase and in some cases your insurance company may decide to not renew your policy.

A claim on your insurance record will impact your premium even if you decide to switch insurers. Most insurance companies report their claims to the Comprehensive Loss Underwriting Exchange (CLUE) database. Insurance companies look at a CLUE report when deciding whether to offer a policy so your new insurance company will be aware of your previous claims and will price your policy accordingly.

When should you file a claim?

In most cases, homeowners insurance should be saved for catastrophic events such as your home being severely damaged by a fire or weather. However, not everyone can afford to cover the cost to repair their home after a damaging storm and may need to use their homeowners insurance to cover a major repair.

In most cases, if you can afford to make the repairs out of pocket, particularly for smaller issues, you should. Leave your homeowners coverage for major repairs and catastrophic events such as hurricanes, wildfires or other events that do major damage to your home.

When you should not file a claim

As we stated above, homeowners insurance should really be saved for major events. Filing a claim for a small issue, a broken window for example, will push up your premium. If the repair costs are only slightly over your deductible amount, it makes no sense to file a claim.

If you have recently filed a claim, you should avoid filing another one until the first one drops off your insurance record. Multiple claims in a short amount of time are a huge red flag for insurers and will result in a major premium increase and in some cases, a non-renewal of your policy.