New Jersey homeowners insurance legislation results from report outcomes

A lawmaker in the state has now introduced a bill to stop premiums from skyrocketing after one claim.

A recent homeowners insurance study brought to light a certain issue with regards to the significant raising of premiums for New Jersey customers after they had made one claim on their policies.

The report showed that this issue was present across the country, but New Jersey took this to heart.

The results were reflected in an insuranceQuotes.com data analysis that determined that after one homeowners insurance claim had been made in 2014, the average premium increase in the United States was 9 percent. In New Jersey, the increase was lower than the average, but was still significant, at 5.7 percent. These figures were calculated based on data from six large insurers, based on a claim for $2,000.

A homeowners insurance company spokesperson was careful to point out that this doesn’t mean that every claim boosts premiums.

State Farm spokesperson in New Jersey, Dave Phillips, stated that the research that was conducted should not make consumers believe that just because they make a claim, they will see their premiums rise. He said that “One claim in it of itself doesn’t necessarily mean you’re going to see a rate increase.”

Phillips went on to explain that “If the claim itself warranted further repairs that may need to be done, or exposed more risk as a result of the loss they filed, there could be a consideration of increasing their premium.”

That said, the practice among home insurance companies was significant enough that N.J. Assemblyman Tim Eustace (D-Paramus) felt that it merited a new bill. Should this legislation pass, it would require insurance companies that increase a policyholder’s premiums after one claim to face a penalty as high as $25,000.

Assemblyman Eustace issued a press release about the insurance bill and explained that the current practices are “incredibly unfair.” He went on to ask “Why should consumers be punished for filing a claim when that is what they paid for?”

That said, not everyone is in favor of the changes proposed under this homeowners insurance bill, as the president of the Insurance Council of New Jersey, Christine O’Brian said that the study that prompted the legislation does not necessarily indicate a problem occurring “across-the-board”, and that there are many different components to a rate calculation.