Allstate Claim Rateguard: It’ll Cost You More Money Today to Avoid a Higher Rate Later

May 20, 2014 5 Comments »
Allstate Claim Rateguard: It’ll Cost You More Money Today to Avoid a Higher Rate Later

Another week, another new product from Allstate, an insurer that always seems to be “innovating” in one way or another.

And by innovating, we mean getting more of your money in exchange for more protection from higher insurance costs in the future. Wait, does that even make sense?

Let’s break down this new homeowner’s insurance coverage option to see if it’s all it’s cracked up to be, or just another marketing gimmick cooked up by the ever-inventive insurance industry.

How Does Claim Rateguard® Work?

They’ve run a few national spots on TV to advertise and somewhat explain “Claim Rateguard®,” which by the way is registered by Allstate.

In one commercial, they show a burglar jumping through the front window of a home after a barking dog scares the would-be thief out without much more than a duffel bag.

Obviously Dennis Haysbert is standing out in front of the house narrating while this all goes down, giving the mutt praise for being a good watchdog.

But he also mentions that each year 95% of homeowners won’t file a claim. However, if you do, your rate won’t go up because of it, so long as you have Claim Rateguard® from Allstate.

So to get this straight, you probably won’t file a claim. And by probably, we mean the chance of filing a claim is about five percent at best, each year, according to his statement. But if you do, your homeowner’s insurance rate won’t go up like it normally would.

In the meantime, you can pay for this optional coverage (listed in Allstate’s enhanced features) each year to avoid paying more in the event of a claim.

For the record, it only applies to one claim every five years, so if you file two claims, the protection is gone, at least until the clock is reset.

The upside here is that you won’t be “scared” to file a claim, and you can actually use your homeowner’s insurance!

Does Claim Rateguard® Make Financial Sense?

That all depends on the numbers, but it’s certainly another case of insuring your insurance. That is, paying an insurance premium AND an additional cost to keep that premium from rising in the future.

It’s similar to accident forgiveness, which isn’t really free either.

First, you need to know how much this optional coverage costs. Is it an extra 5% or 10% a year?

Then determine how much a claim will actually increase your premium. Unfortunately, it’s hard to know how much it will go up, as it depends on your claims history and the type of claim filed. And also the state in which you reside.

If the claim would normally increase your annual premium by 15-20%, it could make sense to buy this added protection. However, if your premium will only rise 2-3% after a claim, or not at all, there’s no sense in paying extra upfront or ever.

And remember, 95% of homeowners won’t file a claim this year, or next year, or the year after. So even if there are potential savings, the chances are pretty slim that you’ll “win” here.

You might even be inclined to file a frivolous claim simply because you can without penalty, though you’ll need to consider the cost of your deductible first.

Additionally, you may feel invested with Allstate, and avoid shopping around, which could cost you even more in lost potential insurance savings.  For example, if another carrier is significantly cheaper, you might be able to file a claim and still pay a lower premium after the fact.

So starting with a higher premium at Allstate with assurances it won’t move any higher may be a losing endeavor.

That being said, tread cautiously with this one before paying an arm and a leg to avoid the repercussions of something that may never actually happen, just as Dennis Haysbert points out.

(photo: Duncan Harris)

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  1. Riley June 16, 2015 at 3:19 pm -

    The advantage of the claim rate guard is that it also comes with the claim free bonus on almost all policies which is a discount that you earn by remaining claim free. So after a few years claim free its actually cheaper to have them then to not have them. Its only more expensive for the first year or two depending on the specifics of the quote.

  2. Bill Reed August 18, 2015 at 1:54 pm -

    You’ve left out one big factor, what if you are shopping and now you have a claim on your record, that more than likely stays with your/on your record for 3-5 years?
    When you go shopping, you’ll find you are going to pay a much higher premium going in as a new client to the new company as opposed to not having a claim on your record and paying say half, in many cases. I’ve checked this out and these are the facts.

  3. Mark September 30, 2015 at 4:07 pm -

    I have a lot of experience with claims and premium increases. One claim will increase your rates at minimum by 20% and it could be well over 50% for several years.

    Claim Rategaurd is an excellent value!!!

  4. sandra dorsey January 18, 2017 at 4:55 am -

    We have “claim free” on our home owners insurance policy, Never used it till a year or so ago when neighbors tree went through our yard, took out shed, and greenhouse. We filed a claim through homeowners insurance, which is Allstate, AND because of filing the claim, we lost our “claim free” discount. SO, if you are saying they don’t penalize you for filing a claim, think again..they sure do..costing me, 197.00 since I lost that “discount” for filing a claim. Lesson learned..I wouldn’t report diddly to them from now on, and let things rot away..

  5. Tay May 5, 2017 at 10:57 am -

    @Sandra Dorsey

    You weren’t “penalized” for filing a claim. You had claims free discount, and reported a claim. The discount is now invalid. So yes, you are paying more, but not due to you having a claim, but losing that discount. Your premium, won’t be doubly increased because of that claim. You have to realize there are a ton of discounts offered to you, and any little change on your policy affects them. You can decide to get bills in the mail and your premium goes up a few dollars. There’s a lot of factors involved. Your premium could have went up even more if you were not with Allstate.

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