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.
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).
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
Why Does One Claim Jack Up My Insurance After Years of No Claims?Even loyal customers can be hit with an insurance premium hike after a claim, despite going many years without any claims. There's a reason for that.
-
Stock Market Today: Stocks End Higher in Whipsaw SessionThe main indexes were volatile Thursday with Nvidia earnings in focus.
-
Credit Report Error? They All Mattercredit & debt Don't dismiss a minor error. It could be the sign of something more serious.
-
Insurance for a Learning Driverinsurance Adding a teen driver to your plan will raise premiums, but there are things you can do to help reduce them.
-
529 Plans Aren’t Just for Kids529 Plans You don’t have to be college-age to use the money tax-free, but there are stipulations.
-
When to Transfer Ownership of a Custodial Accountsavings Before your child turns 18, you should check with your broker about the account's age of majority and termination.
-
Borrowers Get More Time to Repay 401(k) Loans
retirement If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
-
When It Pays to Buy Travel Insurance
Travel Investing in travel insurance can help recover some costs when your vacation gets ruined by a natural disaster, medical emergency or other catastrophe.
-
What Travel Insurance Covers When Planes Are Grounded
Travel Your travel insurance might help with some costs if your trip was delayed because of the recent grounding of Boeing 737 Max planes.
-
Ways to Spend Your Flexible Spending Account Money by March 15 Deadline
spending Many workers will be hitting the drugstore in the next few days to use up leftover flexible spending account money from 2018 so they don’t lose it.
