Eustace Introduces Bill to Protect Homeowners from Steep Premium Hikes from Single Insurance Claims

Recent study found single insurance claim can significantly increase premiums

(TRENTON) – Assemblyman Tim Eustace (D-Bergen/Passaic) has introduced a bill that would prevent insurance companies from raising a customer’s insurance premium based on a single claim.

According to a study by InsuranceQuotes.com, U.S. families who file a single homeowners insurance claim can expect their annual premium to increase nine percent. According to the National Association of Insurance Commissioners, homeowner’s insurance costs an average of $978 per year. Based on the study’s findings, a single liability claim would add an average of $137 to that bill.

“This is incredibly unfair. The whole purpose of paying for insurance is so that you will have the financial backing to make needed repairs when something goes wrong. Why should consumers be punished for filing a claim, when that is what they paid for?” asked Eustace. “A single claim is not an indication of risk and should not be used as a reason to hike up prices. This bill would prevent insurance companies from hitting consumers with steep increases after filing a single claim.”

The bill (A-4170) would prohibit homeowners insurance premium increases based on one claim filed during the policy’s coverage period. Specifically, the bill would prohibit an insurer from considering or categorizing as a claim, the first claim filed under a policy of homeowners insurance during each coverage period for the purpose of determining adverse claims experience and any related increase in premium. An insurer found to have violated this prohibition would be subject to a penalty of up to $5,000 for each violation unless the insurer knew or reasonably should have known it was in violation of the bill, in which case the penalty shall not be more than $25,000 for each violation.

The bill would take effect immediately.

The bill has been referred to the Assembly Financial Institutions and Insurance Committee.