Homeowners insurance premiums increased an average of 12.1% in 2022, according to Policygenius. The increase represents a sign of the times in the homeowners market as high inflation, extreme weather events and labor shortages impact rates and even prompt carrier withdrawals, such as State Farm's exit from California homeowners and commercial property markets. 

“We are currently in a hard market, which means that premiums are trending upwards across the industry," says Paul Gallagher, senior vice president, NFP. “A hard market in the personal insurance space is pretty rare, but we've been in this one for three or four years, depending on who you talk to, and there's no clear sign of it ending."

While inflation, weather events and supply chain issues are uncontrollable, there is something homeowners can control: when to file a claim. There are consequences to consider when filing a homeowners insurance claim, according to a 2023 report by SafeHome.org. In an analysis of more than 1,400 homeowner policies, the report found that homeowners who filed a claim subsequently paid nearly $400 more in premium per year than those who didn't. The average claim amount was $20,700.

Filing a claim against a homeowners policy can be both a complicated and costly matter—one that can be made significantly less costly to a client's premium if agents provide advice on how to avoid the worst claim mistakes.

“Mistake No. 1 is opening a claim with the insurance company before you have a discussion with your agent or broker," Gallagher says. “That's something that we preach to clients—call us first, let's have a conversation before you put in a claim. Most claims can wait for a short conversation with your agent or broker to talk through what the pros and cons are of opening a claim."

Homeowners should think twice about filing a claim with a carrier for damage caused by a lack of home maintenance. For example, if the siding on a house has been left to deteriorate and the homeowner files a claim that is denied, the claim is still included in the Comprehensive Loss Underwriting Exchange (CLUE), meaning it can affect their homeowners premium.

Homeowners are experiencing increasing premiums across the country, but whether the increases are small or large, there are ways agents can help clients save money on premiums. Agents can offer clients a policy with a higher deductible if they can afford to retain that amount of the risk.

“I would speculate that higher deductibles are going to become more prominent and that's where being with an independent agent ensures you have that somebody there to give you that advice and to help guide you through the process," says Mike Grove, senior vice president, head of GRM U.S. product state management, Liberty Mutual. “That's where I would lean on the independent agent."

Insurers correlate claims to a high-risk insured who may file more claims in the future. When setting rates, insurers will look at a client's claims history. When agents are able to offer higher deductibles to manage claims it can be advantageous for clients.

“An average homeowner should try to avoid trading dollars with their insurance companies when they have deductibles that they can afford to keep," says Bill Martin, president and CEO, Plymouth Rock Home Assurance. “It would be much cheaper if they just kept that money in a savings account, let it grow and use it."

“The existence of a claim leads most insurers, where it's legal and fair, to charge a higher rate," Martin explains. “Over time that higher rate is likely to cost more than just paying for the claim."

Agents can ensure clients think carefully about the implications of filing a claim within a few hundred dollars of a deductible. 

On the other hand, large and expensive claims can be complex and include dealing with multiple insurance adjusters. And while some states have enacted laws to deal with the issue of unscrupulous parties taking advantage of homeowners, clients should be cognizant of the risks they face.

“Be wary of people knocking on your door saying, 'sign this piece of paper, you have roof damage and I can get your roof taken care of,'" Grove says. “I would encourage the average customer to report a claim to their agent first before signing any contracts. There is evidence in certain states that folks are trying to generate claims that may not be there."

Olivia Overman is IA content editor.