“Why Your Home Insurance Premiums Rise After a Fire”

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Understanding Insurance Claims for Fire

Experiencing a house fire can be terrifying, but should you also worry about rising home insurance premiums after filing a fire claim? Typically, your home insurance premium will increase after a fire, as it does with any claim. However, a fire insurance claim isn’t the only reason your homeowners insurance costs might rise.

What Is an Insurance Claim for Fire?

A standard homeowners insurance policy generally covers the repair, rebuilding, or replacement of your home’s structure and contents after various types of fires (excluding arson). It also usually covers additional living expenses if your home is uninhabitable during repairs.

To receive payment, you’ll need to file a homeowners insurance claim. This typically involves contacting your insurance provider, completing a claim form, and documenting your claim with photos, videos, or lists of belongings damaged or destroyed in the fire. An insurance adjuster may visit your home to assess the damage.

Why Does Your Insurance Premium Go Up After a Fire?

Homeowners insurance premiums generally increase after making any claim. Fire-related claims have the most significant impact because they usually result in higher payouts compared to other property damage claims.

The average home insurance claim for fire and lightning-related damages was $83,519 in 2021, according to the Insurance Information Institute. By comparison, the average claim for wind and hail damage was just $12,913.

Once you’ve filed a claim for a certain type of loss, insurance carriers may consider your home susceptible to the same type of loss in the future. For example, if you live in a wildfire-prone area and your home catches fire, the insurance company may reasonably expect the same thing to happen again.

Other Reasons Your Homeowners Insurance Premium May Increase

Filing a claim isn’t the only factor that can cause an increase in your homeowners insurance premiums. Other reasons your homeowners insurance costs may rise include:

• Adding new risks: Installing a swimming pool, trampoline, treehouse, wood-burning stove, or other feature that could injure your family or visitors typically means a hike in insurance premiums. Owning certain dog breeds considered dangerous might also boost your home insurance costs.
• Widespread natural disasters: Average insurance losses due to natural disasters have soared almost 700% since the 1980s, according to the Insurance Information Institute. Even if your home has never been affected by a wildfire, hurricane, or flood, insurance carriers may raise your rates to make up for their own escalating costs.
• An aging home: Older homes are more prone to problems, so they typically cost more to insure. As time goes by, outdated electrical systems, aging pipes, or deteriorating roofs can all pose risks for your home—and your insurer.
• Rising construction costs: The price of construction materials has increased an average of 19% since 2020, according to Gordian, which tracks construction costs. Ongoing labor shortages also make rebuilding or repairing homes more expensive.

Look for Ways to Lower Your Home Insurance Rate

Once the smoke clears and you file a fire claim, take steps to keep rising home insurance premiums from putting the squeeze on your budget. Regularly shopping around and comparing prices from different insurance carriers can help keep your homeowners insurance costs down.

A good credit score could also help minimize your home insurance expenses. In most states, insurance companies can check your credit-based insurance score when pricing your policy. These scores differ from your regular credit score but are calculated using many of the same factors. Checking your credit score can give you an estimate of where your credit-based insurance score stands.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We are here to assist you with the best mortgage solutions tailored to your needs.

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