NEW YORK (MainStreet) – If a tree falls near your house, but doesn't hit a building and upends only one segment of your walkway, should you file an insurance claim?
Do the math and give some serious thought to that answer.
According to a report from insuranceQuotes.com, filing a single homeowner’s insurance claim can raise a policyholder's premiums by hundreds of dollars each year. The average rate hike for the first claim nationwide is 9%, but it's far worse in Wyoming (up 32% on average), Connecticut (21%), Arizona (20%), New Mexico (19%) and California (18%).
“Insurance is the only product we buy that we hope we're never going to have to use,” says Laura Adams, insuranceQuotes.com’s senior analyst. "That 30% rate increase is for one claim. If you have a second claim, get really unlucky and have a problem in the next 12 months, that's just going to skyrocket.”
And not by a little. According to the report, the average nationwide premium increase for a second claim is 20%, with Michigan's insurers socking policyholders with a whopping 71% uptick if they file more than one claim within a brief span.
“The home insurer looks at your past performance chart, and they're trying to price the policy according to the risk they're assuming on your behalf,” says Michael Barry, spokesman for the nonprofit Insurance Information Institute. “If you file two policies in a short amount of time, I think insurers are going to take note.”
So what should a homeowner do when considering a claim? Barry and Adams suggest weighing the cost of the claim against the deductible.