Did I Make A Major Home Insurance Claim Error?

I think the answer to the question in my post title is “yes,” but let’s move on – there are other questions…

So, here’s the thing – I don’t have a lot of experience with insurance claims.  Back in January, I had my first auto accident, and I wrote about it on these pages.  My readers gave their informed input, I filed the claim,  and it turned out that when I got the renewal notices this week, everything worked out – my rate didn’t get jacked up.  The information that my Liberty Mutual agent had given me was accurate.

However, we also had a little issue with home insurance: my wife has a pair of diamond earrings on an itemized jewelry rider (along with her wedding ring) which we pay extra for.  She lost one of the earrings, and I called my “guy” at Liberty Mutual again to find out if I should file a claim.   For itemized claim items, like jewelry, there is no deductible.  “You will lose your claims free discount,” he advised me, but gave me no clue as to how big the claims free discount was.  The thing with Liberty Mutual is that they list a bunch of “discounts” that you are receiving, but don’t quantify any of them – they just list names.

Anyway, we just got the renewal papers for the policy, and the rate increased from $742 to $1160. (The itemized jewelry is another $169 on top of that, which didn’t change).  The claim was for $2,000.   In short, my rate got jacked up $418.  Now, what I’m trying to figure out is: how much of this is because I had a claim?  More importantly, since this first claim was the one that killed my discount, what happens if I have to file a FUTURE claim?

In some back and forth correspondence with Liberty Mutual, I was told that some of my other discounts lessen each year (but of course they couldn’t quantify how much), and there are always “replacement cost adjustments” which increase premiums a bit in normal years, but basically the bulk of the increase was the loss of the “claims free discount.”   I explained that I was somewhat perturbed,  since I rely on my LM agent to advise me on such matters, and to emphasize (before the fact, when I talked to him about it) that for a $ 2k claim, I’d be eating a $400 policy increase forever, basically.   I was surprised to hear that home insurance is not like auto insurance – where if you have a claim/traffic violation, and your rate goes up, it then deteriorates back down over time as you re-accumulate a clean record.  I was told that with home insurance, the rates never really go down.  That sucks – is this the experience that my readers have?  If you have a claim on your home insurance, you don’t “work off” that extra premium increase with years of clean, no-claims living?

So, I’m trying to get Liberty to quantify the basic question: now that I’ve lost my big fat claims free discount because it looks like I made a horrible claims filing decision, what happens if I have another claim:  how much does another $2000 claim affect my rate?  How about a $10,000 claim?  Of course, they really don’t want to tell me that, and yet, I need that information to make effective decisions:  if the rate goes up $400 every time I have a $ 2k claim, then it obviously makes no sense to even have coverage for thinks like the diamond earrings.

Most people I talk to say “Oh, I’ve never had a home insurance claim.”  Or “I’ve only had one claim.”

If you’ve had a claim, please give me some info: what happened to your premium?  Was this your first claim?  Did you ever have another claim? What happened to your premium that time?  If you had a claim, and then a period with no claims, did your premium increase ever dissipate?

-KD

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