Insurance claims can cause significant increases in on homeowners’ policies according to the state where they are located according to a new study commissioned by insuranceQuotes.com
Using a hypothetical two-story, single family home covered for $144,000 with a $500 deductible, the study revealed that how much annual premiums can rise following the filing of a claim for fire, hail, liability, medical, theft, vandalism, water (non-weather related), weather (except for hail and wind) and wind.
According to the study, U.S. families who file a single homeowner’s insurance claim can expect their annual premium to increase 9 percent (or about $150). However, premium increases varied greatly by state. Homeowners who file a single claim in Minnesota can expect their annual premium to increase, on average, by 21 percent. Conversely, filing a single claim in Texas won’t result in any premium increase.
According to the latest data from the National Association of Insurance Commissioners (NAIC), the average cost of home insurance increased 36 percent between 2003 and 2010, which is almost twice the rate of inflation. The study’s findings come at a time when most U.S. families are already experiencing an increase in their homeowner’s insurance premiums across the board.
The following five states showed the greatest average premium increase as a result of filing one claim:
1. Minnesota – 21 percent increase
2. Connecticut – 21 percent increase
3. Maryland – 19 percent increase
4. California – 18 percent increase
5. Oregon – 17 percent increase
Meanwhile, the following five states, on average, showed the smallest percentage premium increase as a result of filing one claim:
1. Texas – 0 percent increase
2. New York – 1 percent increase
3. Florida – 2 percent increase
4. Vermont – 2 percent increase
According to the study, premiums in 31 states and the District of Columbia increased by an average of 10 percent or more after filing a single claim. What’s more, only 18 states fell below the national average increase of 9 percent. 5. Massachusetts – 2 percent increase
“For homeowners in states where premiums are going up by more than 10 percent for a single claim, that’s a bit troubling,” says Bob Hunter, former Texas Insurance Commissioner and current director of insurance at the D.C.-based Consumer Federation of America, a consumer advocacy organization.
The reasons behind why there is such a disparity from state to state are varied and nuanced, says Chris Hackett, director of personal lines policy at the Property Casualty Insurers Association of America, an insurance trade association. According to Hackett, rate swings between states come from several factors, including the nature and severity of claims filed in a given state, as well as the different ways in which insurance is regulated from state to state.