People who purchase homeowners insurance want it to cover their homes in the event there is a loss and they need to file a claim. No one likes to lose any possessions or see their home damaged. It is that feeling of loss that makes people very quick to file a claim for even the smallest loss to their home or property, but filing a lot of small, insignificant claims can trigger a warning to the insurance company and ultimately lead to higher premiums.

For example, if you happen to be moving your $1,200 flat screen television from one room in your home to another and drop it, it is well within your right to file a claim for the damages to replace your television. But, you may not want to rush out and file a claim. Depending on your specific deductible, you could find yourself paying $500 out of pocket and receiving a check for $700 from your insurance company. While the $700 will surely help you with a portion of the replacement cost of your television, it may be better in the long run to simply not fail a claim and pay for a new TV out of your own pocket. Eventually, you will reach a threshold with your insurance company for filing too many claims. They would then see you as a potentially higher risk to insure and ultimately raise your premiums as a result. While filing a single claim will not automatically raise your home insurance premiums, you can see your rates climb after two or more.

The purpose of homeowners insurance is to protect you and your financial well-being against a large loss. Small losses from damage or theft, such as the example of dropping your television, are costs that should be paid out of pocket by your emergency fund. Insurance is there to help you with the large claims such as a house fire, tornado damage, or other devastating event that causes thousands of dollars in damages to your home. You should have three to six months of living expenses set aside in an emergency fund. This is an ample amount that can cover any small damages that occur to your home and save you from having to file a small insurance claim that will eventually wind up costing you more in insurance premiums in the long run than if you had simply paid for it out of your own pocket.

All of your insurance claims are kept on file and can be used against you. Most insurance companies in the United States subscribe to a service that provides them with a history of all the insurance claims that you have filed against your homeowners and car insurance policies. This gives insurance companies an accurate representation of how much of a risk you represent and helps the insurance companies determine your insurance premiums when they issue you a new policy. If you have made several small claims against your homeowners insurance, your insurance company will be able to tell when they request your file. If you want to have the best insurance premiums, it pays you dividends not to file small claims that could have easily been covered by your savings.