Will a Homeowners Insurance Claim Denial Raise Your Premiums? (2024)

FAQs

Will a Homeowners Insurance Claim Denial Raise Your Premiums? ›

According to the Texas Department of Insurance, denied homeowners insurance claims shouldn't affect your rates. However, paid-out claims can raise them, especially if you've made multiple ones or the claims weren't due to natural events.

When your insurer determines your premium, they consider several factors, such as the age of your home, the value of your possessions, and the likelihood of a claim being filed. While claims history can impact your premium, a claim denial does not count as a claim. Neither does a question about filing a claim.

Insurers typically use claims history and driving records to determine premiums, and a denied claim is not typically factored into this assessment.

There is no set number of claims that will result in an insurance company dropping you from a home insurance policy. The decision to drop a policyholder is typically based on the frequency and severity of claims, the type of claims filed and the overall risk profile of the policyholder.

You may be able to appeal to your insurance company multiple times based on the evidence you provide. If the outcome is not satisfactory, you can consider contacting a public adjuster to advocate on your behalf or file a complaint with your state's insurance department to act as an intermediary for the dispute.

If the insurer denies the claim, the patient is responsible for the claim amount. In both scenarios, the insurer can either approve or deny the claim. If they approve the claim, the bill is paid. If not, the consumer can appeal the denial.

How many homeowners claims is too many? Generally, if you haven't filed more than one non-catastrophic loss claim in three years, and have no liability losses in three years, you may still be eligible for coverage. Two claims in five years may drive up the cost of your coverage.

A quick way to reduce your premium is to raise your homeowners insurance deductible, the amount you pay if you have to make a claim. If you have a $1,000 deductible, you could save an average of nearly 13% a year by increasing it to $2,500, according to NerdWallet's rate analysis.

Why would my home insurance premium go up? ›

You filed a claim or multiple claims last year

Insurers view claims related to theft, water damage, and liability as more likely to be repeated than others, so they'll often increase premiums after just one of these claims due to that higher risk.

Some are personal factors, like your claims history. In states that allow it, credit history may also be used as a rating factor. Other factors are related to your home, like the ZIP code, year it was built, square footage, general condition and your property's proximity to a fire station, to name a few.

But in the insurance industry, it isn't just your claims history that affects the amount you pay every year. Inflation, policy changes, a hardening market, and even insurance fraud can all contribute to ballooning insurance rates, but that doesn't mean you can't do something about it.

Location The geographical location of your home is perhaps one of the most significant factors influencing your insurance premium. Insurance companies consider various aspects of your location, including weather risks, crime rates, and proximity to emergency services like fire stations.

Home location is one of the biggest factors that insurers use to determine homeowners insurance premiums. Generally speaking, if you live in an area that's prone to natural disasters like hurricanes, tornadoes, or wildfires, you'll pay more for homeowners insurance since the risk of insuring your home is higher.

Under California law, an insurer cannot increase your premiums when you aren't at fault.

That said, you'll usually be looking at an increase of 20%-50%. Unless it's protected, you should also expect to lose any no-claims discount you've built up. Even if it's protected you could still see your premiums rise – this is because a no-claims discount is a reduction from a baseline car insurance premium.

How many claims before your home insurance drops you? While there is no set answer to this question, it is generally agreed that an insurer can only choose not to renew, rather than flat-out cancel, a policy for filing legitimate claims.

Will my car insurance go up after an accident? Unfortunately, the simple answer to this is yes. Whether the accident was your fault or not, making a claim will usually lead to an increase in your car insurance premium the next year and you could see an increase even if you don't make a claim.