Insurance is a frustrating thing to buy, yet it is a very important purchase. Basically, it is risk management. The client transfers the risk of a loss to an insurance company in exchange for premiums. Most people hope that they never have to actually use their insurance policies, but what exactly happens after you file a claim?
If you’re a homeowner who is filing a claim this year, brace yourself to see a large hike in rate cost. A recent industry study ame to the conclusion that on average, filing just one claim on your home insurance policy will result in a 9% increase to your annual premium. That means that means that if you file two claims, you can see an almost 20% hike in your premium. That is definitely higher than the 8% increase that was seen last year. In fact, this is true for about 37 of the 50 states. 37 States and Washington D.C. all increased by an average of 10% or more after one single claim.
There are many different reasons as to why home insurance rates can increase or decrease across the nation, including competition, exposure to different risks, and the likelihood of whether or not you will be making multiple claims in the future. Insurance companies can determine this by your credit-based insurance score. Insurance companies need to regulate and adjust the cost of the premium to match the increased risk.
Even though it can be quite frustrating to be in essence “punished” for using something that you rightly paid for, here are the seven worst states for homeowner’s filing insurance claims based on the premium increases over the past couple of years.
The increase after one claim is 31.6 percent, and the increase after two claims is 36.5 percent.
The increase after one claim is about 21.4 percent, and after two claims is 51.3 percent.
The increase after one claim is 19.4, and after two claims is 33.7 percent.
4) New Mexico
The premium increase after one claim is 18.7, and after two is 29.6 percent.
The increase after one claim is 18 percent, and after two it is 24.9 percent.
The increase after one claim is 17.7 percent, and after two it is 30 percent.
The increase in premium after one claim is 17.7 percent, and after two it is 32 percent.
If you live in these states, it is important to try and keep your risks low, therefore keeping the cost lower than what it would be if you filed multiple claims. Another important thing to remember about homeowner’s insurance is that it is there for you in the wake of a disaster, and it should not be treated as a home maintenance tool. You should only file a claim for a large loss, like a flood for example. If you have a broken window or broken fence you should handle that on your own and pay out of pocket, that way your premium won’t go up annually.