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  • Wen Capital Advisory Group

A Home Insurance Claim: To File or Not To File

Learn when it may not make sense to file a claim on your home insurance.




Insurance is meant to protect you against financial loss. But is it really meant to protect you from any and all financial loss? When it comes to filing a loss claim on your home insurance, there may be times when not filing may be the wisest course of action.1


According to one study, the national average premium increase after filing a homeowners insurance claim is 9%, although this number varies depending on your specific location.2


What About My Premium?


Some insurance companies may protect you against premium increases. However, if filing a claim means your premium will rise, you may need to decide whether it makes sense to do it.

It may not pay to file a claim if:


  • The claim amount is small. Your policy will have a deductible, so even claims of $1,000 to $2,000 may not have a favorable long-term cost benefit.

  • You're not covered for a loss. Read your policy first to determine coverage. The simple act of filing a claim (even for a claim that won't be paid) may result in higher premiums.

  • You have filed a claim within the last seven years. Since previous claims are tracked by an industry database for seven years, it may result in higher premiums.


Another factor to consider: you may want to file a claim regardless of dollar amount if someone is injured on your property, in order to protect yourself in the event that you are sued by the injured party.


CITATIONS:

1. Several factors will affect the cost of homeowners insurance, including the location, size, and contents in the home. You should consider the amount of your deductible and level of coverage before purchasing a policy. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.


This material does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

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