Tuesday, October 22, 2013

Think Before You Claim

Any morning with your coffee, you can hear an attorney or insurance company talking about an auto claim or fire claim.

Yet, did you know that you should make claims on personal property and your home as rarely as possible?

One of the biggest reasons is shared below.  If you live in one of the high increase states, I would be vary wary of making a claim unless the cost benefit of the claim was higher than these rate increases.

Should You Make That Homeowner'sInsurance Claim?

In some states, making a single homeowner's insurance claim can raise your annual insurance premium by more than 20%, according to data collected by InsuranceQuotes

Nationally, making a homeowner's insurance claim leads to an average annual premium increase of 9%.

The states with the highest post-claim increases include:
  • Minnesota 21.2%
  • Connecticut 20.6%
  • Maryland 19.3%
  • California 18%
  • Oregon 17%
  • Arizona 17%
  • Alaska 17%
The states with the lowest post-claim increases include:
  • Texas (insurers are not allowed to boost premiums after the first claim)
  • New York 1.1%
  • Florida 1.8%
  • Vermont 2%
  • Massachusetts 2%
If you're in a state where rates rise a lot after a claim is filed, think before you file a relatively small claim. An example show's why. Suppose:
  • Your insurance is $500 a year.
  • You have a $500 deductible.
  • Your premium will rise 20% after your first claim. 
If you file a $600 claim, you'd receive $100 from your insurance company ($600 claim minus $500 deductible = $100), but your premium would rise $100 because you filed the claim. You'd break even the first year, but you'd be paying $100 more for insurance every year after that. 

By contrast, if you file a $6,000 claim, you'd receive $5,500 from your insurance company and your premium would still rise only $100.

Courtesy of Al Clark's HomeAgain Newsletter
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