Having insurance on your home is obviously a huge benefit when something unexpected happens. When you have damage that needs to be taken care of right away, it’s nice to know that you can file an insurance claim, and you won’t be the one picking up the bill. However, there are certain claims that may raise premiums and hurt you more than they can help. These particular claims can even lead to insurance loss and difficulty obtaining new coverage.
How to Properly File an Insurance Claim:
First off, when you file an insurance claim, there are two databases the information can be submitted to. The most popular is CLUE (Claim Loss Underwriting Exchange), which is managed by Choicepoint. The second is A-PLUS (Automated Property Loss Underwriting System), operated by the Insurance Services Office. Both databases include millions of claims, since they can be sent to either one.
Most of this information is kept for five to seven years. When you apply for insurance, the company will access the report to view your claim history. If they see too many individual claims, or those of a certain nature, it may decrease your chances of getting insurance at a low rate or at all. Filing as few as two insurance claims in a three-year period can trigger a hike, but most companies will base their rate increases on factors including how long you’ve been with the company and the nature of the claims.
If your insurance claim is an emergency, such as basement flooding, it’s always best to call a home contractor immediately. If you wait until regular business hours, the damage may spread. Experienced contractors can help you understand the insurance claim process and will get to work quickly to fix the damage.
Many homeowners policies have a time limit on filing claims. Be sure to act quickly if you’ll be making a claim to ensure it’s filled in the right time period.
Will filing an insurance claim increase my rate?
Now something has happened, and you don’t know whether you should file an insurance claim or not. Generally speaking, a single claim will not increase your homeowners insurance rate for residents in Southeast Michigan. The price hike is typically seen after a homeowner makes several claims within a specific time period. CLUE lists claims for seven years, so this is important to consider when getting your homeowners insurance involved.
While there are no official guidelines, here are a few tips that can help you decide if you should file a claim:
- Weather-related damage generally doesn’t result in a rate increase. Filing an insurance claim for water damage, however, is known to send CLUE reports into a tailspin. Mold removal can be expensive, and water damage can decrease real estate value. Some companies have chosen to completely exclude mold coverage due to the high expense. Plumbing claims may also raise a red flag, especially if the repair led to another related claim. Real estate agents can’t access your CLUE report, but the homebuyer’s insurance carrier may use it when determining their coverage. When it comes to minor water damage, it may be smarter to hire the help yourself and avoid filing an insurance claim altogether.
- Theft and vandalism are red flags for insurance providers. These types of claims are depict a homeowner as “high risk.” The assumption is if it’s happened once, it is more likely to happen again in that home. Fixing these problems on your own is almost always better than filing a claim.
- Understand the “claims-free discount.’ Some insurance providers reward customers that have a clean record. If you’re currently getting this discount, your premium will go up no matter what claim you make. This discount can be as much as 20%, so be sure to read your policy carefully.
- Fire claims are almost always worth the risk of a price increase. Damage caused by home fires can be expensive, complicated projects to fix. Unless the fire was caused by negligence, such as a fireplace that wasn’t maintained, your homeowners premium should not increase if you make a claim. If it does, however, the price increase is almost always worth making the claim. Smoke and fire damage can be difficult to eliminate. Water used to extinguish the flames can cause serious damage. Filing a claim can help you ensure these are properly taken care of and decrease future risk.
Working with an insurance agent and home contractor you can trust are vital to decreasing your risk of a rate increase. Serving the metro Detroit area including Royal Oak, Troy, Birmingham, Farmington Hills and many more, Bloomfield Construction can help by advising you before you actually file a claim.
Consider calling Bloomfield Construction before filing a claim. With a detailed inspection and report from our home contractors, you will be better prepared for a conversation with an insurance adjuster. This knowledge can help strengthen your claim and ensure you get the right amount to make any necessary repairs.
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