How Homeowners Insurance Claims Will Boost Your Rates

Just one claim can have a big impact.

In a recent column about high deductibles on homeowners insurance, you wrote that making homeowners claims can boost rates. How big a difference can it make? --A.T., via e-mail

In most states, making just one claim on homeowners insurance can have a surprisingly big impact. A study by InsuranceQuotes.com found that making one claim over a 12-month period led to a 9% premium increase, on average. The results vary by state, ranging from more than 20%, on average, in Minnesota and Connecticut to no increase at all in Texas, where insurers are not allowed to increase premiums in response to the first claim.

The practice of rate-hiking is one reason that it’s smart to raise your deductible. Boosting it from $500 to $1,000 can lower your premium by up to 20% and make you less likely to file small claims that could result in a rate hike. For each state’s average increases, see the “home” section of InsuranceQuotes.com.

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Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.