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Homeowners insurance is based on statistics, with premiums based on the likelihood that you'll file a claim. With certain types of claims, filing one claim means you're more likely to file more claims. Other types of claims might not result in your premium going up. Increases depend on the type of claim, as well as on what's reported in insurance-industry databases. Your premium won't necessarily rise after three claims.
Types of Claims
Certain types of claims are more troubling than others to homeowners insurance companies. Dog bites are the single highest cause of homeowners insurance claims, according to the Insurance Information Institute. Just one dog bite case is usually enough to cause a premium increase. Inurance companies view water damage the same way -- only one or two claims for water damage can cause a premium increase. A single slip-and-fall claim can also cause your premium to rise.
Size of Claims
Insurance companies look at the administrative cost of a claim as a significant expense, as it costs as much to process a small claim as a large one. In fact, it's disproportionately more expensive for an insurance company to handle a small claim. Some small claims happen more frequently, and they can cause premium increases more quickly. A large claim isn't necessarily going to cause your homeowners insurance company to look at you as a bad customer.
Ninety-eight percent of all insurance companies report claims history to national databases. These reports are sold to insurance companies when you apply for a new policy. The information in your report can mean you'll pay more when you apply for a new policy. It also can your premiums to increase if your present insurer requests a copy of your report, and it shows claims on other policies you carry. Again, the type of claim is more important than the number of claims.
Instead of increasing your premium, your insurance company may cancel your policy if it isn't happy with your claim history. If your existing policy is canceled because of your claims, you might have difficulty obtaining new insurance coverage. Although a single claim generally won't lead to cancellation of your policy, multiple claims within a short period can make the insurance company reconsider your policy.