my home was burglarized, my homeowners insurance company (Allied) said that if I file a claim my insurance?

Question

premium will increase as mush as 4%. Let me understand this. Allied will give me a check for the items taken then make me pay for the check over time....Isn't that like being vicimized twice? Why would my premium increase for using my homeowners insurance? Isn't that what I've been paying them for every month for the last 3 1/2 years?

Answer 1

Actually, that's how it works with every insurance company these days.

Yes, I hear lots of complaints about that. But then they are assigning your rates based on your risk score. (How likely you are to have a claim.) The only way they wouldn't charge you claims points (which is what they're talking about when they say your insurance will go up) is if they charged EVERYONE like they were in the highest risk group. Why don't you ask the people who were in the path of Katrina how they like those kinds of rates? (In other words, they could just assume that you're going to turn in a lot of claims and charge you the highest possible rates all along. Or they can rate you based on your risk profile and then increase your premium if your risk profile changes.)

Incidentally, I doubt they meant a 4% increase. A theft claim will assign you 4 claims points and that usually translates to a 30-40% increase.

For big claims, there's no question you turn it in. But this is why insurance agents recommend you take larger deductibles, because it's rarely worthwhile to turn in small claims. (You'll likely end up paying more out in premium over the three years that you're assessed claims points than you ever got back out of the claim in the first place.)

Answer 2

Whatever you do, DON'T take Magnolia's advice. If you were an insurance company, how would you evaluate a policyholder who kept changing carriers?

Exactly.

In most cases, the insurance company doesn't make money (or much money) in the first year. 15% or 20% goes to the agent's commission, another 10% or so to the expense of poilyc issuance and setting up a record, 5% for premium tax, and perhaps $25-$50 for an inspector to scope out your place and take a few pictures. The renewal commission goes down the second year and the cost of setting you up doesn't repeat, there is no new appraisal -so that's the year they start making meaningful bucks on your account, which you very much WANT them to do so you get paid when a fire wipes out the whole place.

That said, you need to see just what 4% amounts to. If you're paying $500 a year, its $20. If your loss was $1,000, it would be 50 years before the carrier got the "money back." If you would just as soon "self-insure" for $500 or $1,000, then raise your deductible to that amount and take a savings. And on the other hand, if you went to look for replacement coverage and showed a recent claim, the new company might start you on a higher pricing track -and not tell you. Most carriers actually have a "stable" of companies -one for the really low-risk customers, another for the ones in the middle, and yet another for people with claims records or other underwriting problems.

So, see how bad it really is -and THEN make your decision.

Answer 3

Yes, that's how insurance companies work. They only want you when you have no claims and they can get the premiums. Once they have to shell out money, they want to get it back, so you are right, you're paying twice.

You should check on other insurance companies. It's good to change every 2 years because you'll find another company that will give you a lower rate than you are now paying. Same goes with car insurance. And if you put both with the same company they generally give you a discount.

Answer 4

Unfortunately, that is how it works in most cases when you are with a company that does not allow you to have a claim every "X" amount of years without raising your rates. Most people shop for the cheapest rates these days without considering what they are paying for. It takes bad things like this for people to find out what companies to stay away from. If you talk to people about what insurance companies are really good claims handlers you will find the ones that treat their customers right are the best no matter what it costs and most times it is not much different. File the claim and find a better company if it is a substantial amount. Anything paying out under $500 is not going to raise your rates with most companies.

Answer 5

I agree with the first answer.

Also, a four percent increase is not a big increase. Shop around before you change policies. The other companies may charge more than standard since you were robbed?!

Answer 6

WEll, you'll lose your "loss free credit". 4% is NOT much of an increase.

Keep in mind, whatever condition that made your house a target for the burglary, is likely still there. So once you have the FIRST theft, you're MUCH more likely to have a second one - they know they can get in!!