Homeowners insurance is designed to provide protection and financial support when a catastrophic event occurs in your home. Most insurance policies come with deductibles that the policyholder is responsible for before the insurance company will cover the rest of the cost. Homeowners insurance deductibles can range from a few hundred dollars to several thousand dollars, depending on the policy.
So, what should be done with incidents that might spark small claims?
Homeowner’s Insurance: What Frequent, Small Claims Can Do to the Costs of Your Coverage
When something goes wrong in your home, such as a leaky pipe or a broken window, it can be tempting to turn to your homeowners insurance for assistance. However, in Oregon, it’s not always a good financial decision to make small home claims, especially if you have a high deductible.
One of the main reasons it’s not advisable to turn in small home claims in Oregon is that it can raise your insurance premiums. Insurance companies typically view policyholders who make frequent claims as higher-risk clients, and they may adjust your rates accordingly. This means that if you turn in a small claim, your insurance company may raise your rates, even if the claim was a one-time event.
In addition to the increased premiums, you may also lose your claim-free discount. Many insurance companies offer discounts to homeowners who have gone a certain amount of time without filing a claim. If you turn in a small claim, you may lose this discount, which can increase your premiums even more.
Another reason it’s not advisable to turn in small home claims in Oregon is that it can hurt your ability to get insurance in the future. Insurance companies are more likely to deny coverage to people who have a history of making frequent claims. This means that if you turn in a small claim, it could make it harder for you to get insurance or force you to pay higher premiums.
It’s also important to consider the cost of your deductible when deciding whether to turn in a small home claim. If the cost of the repair is close to or less than your deductible, it may not be worth turning in the claim at all. For example, if your deductible is $1,000 and the cost of the repair is $1,200, it may be more cost-effective to pay for the repair out of pocket and avoid turning in a claim altogether.
How Insurance Providers Handle Frequent, Small Claims
Furthermore, making frequent claims can also increase the chances of your insurance company canceling your policy altogether. Insurance companies have the right to cancel a policy if they believe that the policyholder is too high of a risk. This means that if you turn in too many small claims, your insurance company may cancel your policy, leaving you without insurance coverage.
Overall, it’s important to carefully consider the financial implications of turning in small home claims in Oregon. If the cost of the repair is close to or less than your deductible, it may not be worth turning in the claim at all. Furthermore, making frequent claims can result in increased premiums, loss of claim-free discounts, and even the cancellation of your policy. It’s important to weigh the potential benefits of turning in a claim against the potential costs before making a decision.
In our experience at the retail insurance agency level: small claims accumulate to create a situation where the home underwriters at companies, when considering to offer terms of new business, decline because strategically, underwriting guidelines tend to show that frequency leads to severity… meaning that if a homeowner experiences a couple of small claims over a five year period, that during the next five years a large claim is due to occur. Obviously, this does not always occur, but statistically, this does happen with some reliability. And when a company declines to offer terms for new business, others are likely to follow suit.
We recommend higher deductibles, so that those small claims don’t get submitted to the companies, because even claims that do not get paid by the insurance companies can sometimes, in certain circumstances, be counted against the home owner’s loss record. Many companies use different approaches to these decisions, so it isn’t possible to demonize any set of companies or to boost others, but just to know that statistically it is a great idea to avoid those claims.
Questions? Call your agent to ask how your company addresses small claims. Perhaps you’ll be advised to lower your premium by increasing your deductible, especially if the situation dictates that submitting small claims is not advised anyway. I can tell you that the days of the standard $500 deductible are long gone!