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Jonathan Pflueger
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  • Rental Property Investor
  • Ben Lomond, CA
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So Much Fear Around Insurance Claims: Is a rate raise automatic?

Jonathan Pflueger
Pro Member
  • Rental Property Investor
  • Ben Lomond, CA
Posted Feb 22 2024, 07:51

Many believe and advocate that filing a homeowners insurance claim will lead to higher rates, discouraging claims altogether. This subjective and heavily pushed idea seems driven by a real sense of fear. I mean, why pay for a service and not utilize it when you need it? Filing insurance claims is the cost of doing business in real estate and if you can’t afford a rate raise maybe the investment you own is not really a true investment…

What have been your experiences with this? At what cost threshold do you decide to file a claim? If you did file a claim was your insurance automatically raised astronomical amounts?

I have filed multiple claims across several properties and some have more than one claim (all within 1-2 years) and I have not had any rate adjustments. Is my experience normal?

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Owen Rosen#3 Rehabbing & House Flipping Contributor
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  • Keego Harbor, MI
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Owen Rosen#3 Rehabbing & House Flipping Contributor
  • Professional
  • Keego Harbor, MI
Replied Feb 22 2024, 13:28
Quote from @Jonathan Pflueger:

Many believe and advocate that filing a homeowners insurance claim will lead to higher rates, discouraging claims altogether. This subjective and heavily pushed idea seems driven by a real sense of fear. I mean, why pay for a service and not utilize it when you need it? Filing insurance claims is the cost of doing business in real estate and if you can’t afford a rate raise maybe the investment you own is not really a true investment…

What have been your experiences with this? At what cost threshold do you decide to file a claim? If you did file a claim was your insurance automatically raised astronomical amounts?

I have filed multiple claims across several properties and some have more than one claim (all within 1-2 years) and I have not had any rate adjustments. Is my experience normal?

1. Filing a claim will likely lead to a rate increase

2. This doesn't mean you should never file a claim or be fearful of doing so.  It simply means you should make sure the incident is worth filing a claim over.

3.  That threshold should be discussed on a per property and per individual basis with an agent that is trustworthy, knowledgeable, and has your back.

4. It's highly unlikely you can file multiple claims in a short period of time on the same property and not experience a rate increase in the current market.  Most carriers would non-renew in this climate to take it a step further.  Not a reason not to file a worthy claim but it is a reason to make sure the claim is worthy.  If you have been filing multiple claims on properties and not taking rate increases or having other actions taken your experience is not normal in my opinion.

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Jonathan Pflueger
Pro Member
  • Rental Property Investor
  • Ben Lomond, CA
334
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336
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Jonathan Pflueger
Pro Member
  • Rental Property Investor
  • Ben Lomond, CA
Replied Feb 22 2024, 14:07

 @Owen Rosen

I wonder how much of this is based on the insurer you have, the amount of properties they insure for you, and the type of claim you file for. For instance, a claim filed under a federally declared natural disaster is most likely looked at very differently than a claim for a leaky pipe. 

My biggest gripe is that these differences are never discussed or talked about and most people that I read or talk to have this feeling that not filing a claim is almost always better than filing (except in total loss situations and very high dollar amount claims). 

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