A man considers how a claim can affect his home insurance premium as he looks at his laptop and smartphone at a desk

Your home insurance policy is there to protect you when you need it most — but some homeowners are afraid to make claims because they’ve heard claims can lead to higher premiums. While it’s true that making a home or tenant insurance claim could have an impact on the cost of your insurance, you might feel better if you understand exactly why that is. Here’s the inside scoop on how and why the cost of your home insurance could change after you make a claim.

You could lose your claims-free discount

Many insurers offer claims-free discounts that reduce the cost of your home or tenant insurance when you haven’t made any claims (or when you’ve been claims-free for a set period of time). If you’ve been benefitting from a claims-free discount and find yourself making a claim, you could lose out on that savings — the good news is your discount could be reapplied in the future if you remain claims-free for the specific number of years set out by your insurer. Instead of considering this a premium increase, consider it a discount you no longer qualify for (but you might again in the future).

You may have to pay a premium surcharge

Making multiple claims in a set time period (called “frequency of claims” in the insurance world) can result in changes to the cost of your insurance. After you’ve made several claims in a block of time set out by your insurer, you may have an extra charge added to your premium. How much your premium goes up by will depend on the types of claims you’ve made, how much damage needed to be repaired, where you live, and your claims history. No matter how big the increase is, the protection provided by your policy will usually far outweigh this type of surcharge if you need to make another claim — and, depending on your payment plan, the surcharge will likely be divided up and paid over time rather than in a lump sum, just like your existing premium.

How do surcharges work? Picture this: You’ve made a few home insurance claims and your insurer decides to add a 10% surcharge to your premium, which adds up to $200 for the entire year. A few months later, a flood in your basement causes $20,000 worth of damage. When you submit a claim for the flood, your insurer agrees to pay for the repairs, meaning you don’t have to empty your bank account to dry out your basement. In this case, that extra $200 was a small price to pay to prevent a much larger financial loss.

If you’ve made multiple claims in a set period, your home insurance premium may increase. However, the increased premium will still be lower than the cost to repair your home after an unexpected storm, fire, or other insurable risk.

You may have to shop for high-risk insurance

If you’ve made multiple home insurance claims, your insurer may decide not to renew your policy for another year — and you could find yourself hunting for high-risk insurance. Given the nature of high-risk insurance, it usually comes with a bigger price tag (and less coverage) than regular home insurance — so the switch to high-risk insurance could land you with a higher premium for more limited coverage.

Sometimes accidents happen, and your home insurance policy is there to protect you when they do — so don’t let a potential increase in premium stop you from making a claim when you really need to. Your group’s licensed insurance broker can help you understand what happens before, during, and after a claim, and they’ll advocate for you every step of the way.

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