Your home is your castle. Keeping it insured is a major priority. But how can you be sure that your homeowners insurance rates will not increase year after year?
Preventing Homeowner Insurance Premium Increases
The simple answer is to not make any claims. Even little claims for damaged or stolen personal property items could potentially increase your regular premium. Small claims for personal property or damage to neighbor’s property, say from a fallen tree, require your insurance company to refill capital reserves for future claims. How do they make up the difference? Collect more premium from you.
Common Examples of Red Flag Claims
Bigger claims have a bigger chance of rate increases, especially if any property damage is your fault. Say, for instance, that you failed to take care of ridding termites at the time you bought the house. You most likely received a termite report from an inspector. If you suffer damage that needs restoration years down the road you can be sure that your neglect will not be taken lightly by your insurance company.
Another example may be a small kitchen fire. Did you use flammable cooking material? Was your stove in disrepair? A claim for kitchen restoration may trigger a rate increase if the insurance company determines there was neglect of any kind.
Fault or No-Fault: Premiums May Increase
Sometimes rate increases may be no fault of your own. In regions where catastrophic claims occurred, in the Gulf region after Hurricane Katrina for instance, a widespread rate increase would be seen to aid the insurance company in refilling reserves and plan for future catastrophic events. Even if your home was spared and suffered no damage it is likely that your homeowners rates will increase.
Of course, if you experience bigger damage to a part of your home it is natural and in the order of business to make a claim. But if you can pay out of pocket for smaller damages or personal property loss, your claim prevention could ultimately save you money on premium increases.
