Insurance claims are an inevitable part of owning a home, and part of evaluating homeowners coverage is determining how often on average you can expect to file a claim. While we certainly don’t have a crystal ball when it comes to claim frequency, we do have the history of previous claims to draw upon. These estimates can give you a rough idea of how often you can expect potential claims to arise. This in turn can help you determine your ideal insurance deductible. It can also be helpful in long term financial planning and help you avoid future claims altogether. So if you haven’t already, it’s time to ask – how often are homeowners claims filed on average?
How Often Are Homeowners Claims Filed?
The majority of homeowners don’t file a claim very often. Most owners shouldn’t need to file a claim for at least 10 years, or perhaps even longer depending on where they live. Insurance data shows that on average homeowners claims don’t happen to the same party very frequently. This is good news for you as a homeowner, but it also brings with it some caution. First, you should always be financially prepared to absorb your homeowners deductible should the unexpected strike. We’ll talk about this more in a second. Secondly averages are just estimates, and they certainly don’t apply to your individual circumstances. Worst case, you should be able to manage two deductibles in back to back years. If you live in a higher risk area, say one prone to annual hail storms, this is a possibility you have to consider. However generally speaking, you shouldn’t expect homeowners claims very often.
Why Claim Averages Matter
Since you never quite know when you’ll actually need to file a homeowners claim, why does it matter how often the average homeowner files? First off, expecting a potential claim is smart financial planning. This data can tell you on average when to expect and plan for additional costs like those required to meet your homeowners deductible. You should plan for best and worse case scenarios. For example, you may not need to pay out a deductible for 20 years or more, and money allocated in your savings for covering the deductible can be devoted to other items like home improvement as it earns interest. Next, there may be times to raise or lower your deductible depending on averages and your individual financial situation. For example, if you can easily cover a deductible like that of $5000 or more on your home, you may want to raise your deductible to save on your monthly or annual premiums. Even if you don’t have a lot of free funds to devote to a high deductible, you may still feel more secure opting for the higher deductible knowing the averages on homeowner claims.
When Possible, Avoid Filing Your Own Claim
Another factor in assessing how often are homeowners claims filed is avoiding claims if all possible. Even though you have the option of filing a claim should damage happen to your home, it doesn’t necessarily mean you should. Wait, you mean even though you have homeowners insurance, you shouldn’t use it? Remember, insurance companies don’t want you to file a claim unless you absolutely have to. Filing a claim that costs just above your $5000 deductible isn’t usually smart practice, because the money you gain to pay for the small claim will inevitably be lost and then some in raised premiums down the line. Since it’s smart practice to avoid small claims to save in long term premiums, many homeowners avoid small claims, which then drives down claim averages.
Claim Prevention Matters Too
Don’t forget that claim prevention starts with the homeowner, and money spent on smaller preventative measures today can pay big dividends down the road. When planning long term, don’t forget to allocate funds to home improvements and claim prevention. This could be as simple as installing a sump pump in the basement to avoid substantial flooding or fixing a stairwell to avoid future injuries to guests. Or they could be larger projects like removing an old tree from your yard to prevent future home damage or installing a home security system to protect against theft. These fixes will help keep your claims rate low and your premiums low as well.
Final Thoughts
So now you know more about how often are homeowners claims filed, it’s time to put this knowledge into action. You can contact your insurance broker to evaluate your current deductible and decide if you want to adjust it. Your insurance broker will also have some additional tips on how to keep your individual premiums low. While you’re talking, you may want to ask them to shop other coverages if you’re not happy with your current homeowners policy. You have a lot of options to keep your claims average as low as possible if you plan ahead.
