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Fire & Water - Cleanup & Restoration

Insurance Rates: Understanding Common Causes of Rate Hikes

10/5/2018 (Permalink)

Water Damage Insurance Rates: Understanding Common Causes of Rate Hikes Drying equipment on a water damage in a West Jordan, UT kitchen

Homeowners assume that rate hikes are associated with every insurance claim, but that is not always the case. Several factors lead to rate hikes, and a claim is only one. Some of the leading causes of rate hikes are as follows:

1. Number of Claims

Rates reflect risks, and if you make repetitive claims on your policy, then that will signal your insurer that you are a liability and a risk, which will be reflected in your rates. While it is not always possible to avoid making claims, you should limit your claims to only issues you can’t handle on your own.

2. Type of Claims Made

Also, the type of insurance claim made can have varying effects on your rates. For instance, while water damage is one of the most common claims made by homeowners, the severity can differ depending on the cause and exposure. For example, a toilet backup that is contained in one small bathroom will not affect your rates as much as a pipe break that floods the entire lower level of your home.

3. Insurer Responsibility and Homeowner Liability

While a home flood will have an impact on your rates, the extent and value of those rate hikes come down to insurer responsibility and homeowner liability. Insurance companies have a responsibility to cover the costs stipulated in the policy agreement, but they also have the right to adjust their price based on a homeowner’s ability or inability to demonstrate responsible ownership. Constant claims or damages due to failed maintenance are red flags that result in higher rates.

4. Your Ability to Manage Your Property

Insurance companies want responsible clients. You can demonstrate this responsibility by performing routine maintenance and hiring professionals in West Jordan, UT, to conduct inspections, keeping copies of receipts and invoices as proof. Clients who can prove responsibility will likely maintain low insurance rates because they are not a high risk for insurers.

Many homeowners try to avoid making any insurance claim because they fear the potential rate hikes. However, if you are a responsible homeowner and perform routine maintenance and inspections, rate hikes don’t have to be such an area of concern.

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