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Homeowners, Skip Small Damage Claims

Filing just one homeowners insurance claim boosts annual premiums by a national average of 9%.

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A pipe burst in my house and caused water damage in my living room. I know that insurance companies sometimes increase premiums after a water-damage claim. What should I do? --S.H., Washington, D.C.

See Also: 10 Factors That Can Raise Your Insurance Premiums

The answer depends on how big the claim is and where you live. A study by InsuranceQuotes.com found that filing just one homeowners insurance claim boosts annual premiums by a national average of 9%; in Washington, D.C., the average boost is 15.2%. If the claim is small, you could end up paying more in higher premiums than the amount you received, says Derek Ross, an independent agent in Tarzana, Calif.

Before filing a claim, estimate how much your potential settlement would exceed your deductible. Then compare that to the potential rate increase. (See the study at www.insurancequotes.com/home for the average increases by state, which range from 32% in Wyoming to 0% in Texas.) The increase can last as long as seven years, says Laura Adams, senior insurance analyst for InsuranceQuotes.com. You can’t escape your record by switching insurers, either. Insurance companies share up to seven years’ worth of claims data through a database called the Comprehensive Loss Underwriting Exchange (CLUE).

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