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, filing just a single claim could increase your monthly premium by 20 percent, depending on where you live.²

What About My Premium?

Some insurance companies may protect you against premium increases, and in Texas, insurance companies are even prohibited from increasing rates following a first claim. 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.

1. Several factors will affect the cost of homeowner’s 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.
2. National Association of Realtors, 2019

The ownership structure of a condominium unit is different from that of a single family house. Here’s what you need to know when purchasing insurance for your condo.¹

1. Understand the Master Policy

Since the ownership of all common areas is shared with other condo owners, the association of owners typically purchases insurance coverage (a master policy) for the common areas, e.g., hallways, exterior walls, etc. The condo association’s policy will outline what is covered and what is not.

2. Three Types of Coverage

There are three basic types of coverage under a master policy.

• Primary buildings and common areas
• Your unit and any items within your unit, other than personal belongings
• Building, unit, and any fixtures

The individual coverage you may consider depends upon the scope of coverage of the master policy. Start by determining what is and isn’t covered under the master policy – this can influence the coverage you may need.

3. Know the Master Policy Deductible

Generally, an association’s master policy has a deductible that is charged pro-rata among unit owners in the event of a claim. Determining that obligation is important because while it may never materialize, it could represent a meaningful financial commitment.

4. Consider Additional Coverage

Similar to any homeowner, you will need to make decisions about other coverage options, such as cash value or replacement coverage, adding personal liability coverage, and whether flood insurance may be appropriate.

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