Minnessota, Connecticut and Maryland residents experience the highest premium increases on their homeowner's policies after paying one claim, reports a new study from InsuranceQuotes.
On average, those filing a single claim in Minnesota can expect their annual premium to increase by 21 percent, tying Connecticut for the highest rate jump in the country.
Maryland, California, and Oregon round out the study's top five states, with an average post-claim increase of 19 percent, 18 percent and 17 percent, respectively.
The national average premium increase after a loss incident is nine percent, or about $150, for a hypothetical two-story, single family home insured for $144,000 with a $500 deductible covered for claims including fire, hail, liability, medical, theft, vandalism, water (non-weather related), weather (excluding hail and wind) and wind damage.
“For homeowners in states where premiums are going up by more than 10 percent for a single claim, that's a bit troubling,” Bob Hunter, former Texas Insurance Commissioner, told InsuranceQuotes.
National Association of Insurance Commissioners (NAIC) data shows that across the board, average home insurance costs increased 36 percent between 2003 and 2010, or almost double the rate of inflation.
Residents of Texas, New York, Florida, Vermont, and Massachussetts enjoy the nation's smallest post-claim homeowner's insurance price increases: those in the sunshine state see about a 2 percent jump in claims after an event, while Texans experience virtually no change in their policy.
According to industry experts quoted in the study, insurance rate swings between states are caused by the nature and severity of regional weather-related disasters, as well as variations in state-by-state regulation.
“My assumption is that the states with the smallest increases probably have restrictions on what an insurance company can do to your premium after filing a single claim,” said Amy Bach, executive director of consumer advocacy group United Policyholders.
For example, Texas, where it is illegal for insurers to increase premiums for homeowners filing first-time claims, has the lowest average premium hike in the nation.
“Texas is arguably one of the most disaster-prone states in the U.S., so home insurers there set their rates with some expectation of potentially large catastrophic losses already built into the premium,” said Robert Hartwig, president of the Insurance Information Institute (I.I.I.).
Natural catastrophes might be the cause of Minnesota's claim-hike woes. The Insurance Federation of Minnesota said the state's average home insurance annual premium jumped from $368 in 1998 to nearly $1,000 in 2010—a 161 percent increase.
Minnesota has also experienced more natural disasters than usual over the past decade, and in 2010, it was hit with 144 tornadoes, more than three times its annual average.
“Before 1998 we were considered a pretty stable and relatively cheap state to buy homeowner's insurance,” said a spokesman for the state's insurance federation.
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