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When you should avoid filing a cosmetic claim

October 20, 2015
Sometimes filing a claim isn't the most affordable way to repair damages to your home.

Paying out of pocket to repair damages to your home when you have home insurance might seem like lunacy. If your house is hit by a fallen tree or a vandal breaks your windows, why wouldn't you file a claim? After all, what are you making those monthly payments for?

However, just because you can file a claim, doesn't always mean you should. Cosmetic claims, those filed for damage that affects the appearance but not the function of the home, are typically covered by insurance. But while you would be operating well within the intentions of the homeowner's policy by filing such a claim, that doesn't mean your insurance premiums won't go up.

In fact, according to a study from InsuranceQuotes.com, filing even one claim can raise your monthly premium 9 percent on average. In some states, the increase may be as high as 32 percent.

Nature and frequency of claims

According to the study, the monetary amount of the claim filed was less important than the type. For example, liability claims, including personal injury claims, caused the greatest rate hikes. Damages related to theft or vandalism also caused premiums to spike as these crimes led insurance providers to believe the home is situated in a neighborhood where crime, and ensuing expenses, may recur.

However, according to a report from the Insurance Information Institute, the most frequent home damage claims were related to wind and hail, and the National Association of Realtors argues many of these claims were for cosmetic damage homeowners mistakenly believed to be dire.

In addition to the type of claim you're filing, you want to be sure not to file too often. According to BankRate, filing a single home insurance claim for weather related damages is unlikely to raise your rates, but making two claims in a three-year period probably will. Whether you receive a rate hike may also depend on how long you've been with your insurer, the publication reported.

When to pay out-of-pocket

"It may ultimately be more cost efficient for the homeowner to fix the damage without filing a claim.”

In the case of minor damage like dings, dents, missing roof tiles or broken windows, the NAR suggested it may ultimately be more cost efficient for the homeowner to fix the damage without filing a claim, rather than risk a higher premium. MoneyTalks News suggest another rule of thumb:  if the cost of the repair is less than your deductible, never file a claim. You'll be paying for the cost either way, so you might as well keep the damage off your insurance record.