Living in a region vulnerable to significant storms, homeowners may find it difficult to secure insurance. But if you file too many claims, do you have to worry about them canceling your policy as well? It doesn’t seem like something we should have to worry about – after all, for years we faithfully pay our homeowner’s policy premiums. Suddenly, a run of bad luck causes us to file a few insurance claims over a year. Isn’t that our right? Isn’t that what we pay for? Unfortunately, insurance companies routinely cancel those who file too many claims. Let’s explore the situation further.
The Basics of a Homeowners Policy
Homeowners purchase insurance to protect their homes and belongings from any number of disasters or accidents, large and small. These may include losing your roof during a major hurricane or your nephew tripping on your concrete patio and breaking his leg.
Filing a single claim is typically not a problem. Filing multiple claims, however, can begin to get challenging. Too many claims (by the insurance company standards) can first cause an increase in your premiums – but they could move straight to cancellation or non-renewal. This is because homeowners insurance is not exactly a cash cow for insurance companies. In fact, over the last several decades, insurers paid out more in homeowner’s claims than they took in as premiums. This is due entirely to the effects of natural disasters that can affect large regions at one time and cause billions of dollars worth of damage. About 15 years ago, after a few particularly stormy hurricane seasons, many insurers moved out of Florida entirely, refusing to provide insurance given the high risk of claims.
Did You Know? Hurricane Katrina (2005) set an all-time record, racking up 123 billion dollars in claims. 2011 comes in second place for “bad years for insurance” when a series of earthquakes, floods, and tornados cost insurers 116 billion dollars.
Insurance providers don’t feel too much pain if they drop you, especially if you are frequently calling for another payment. This is why you may want to consider just how important it is to file that claim. If the damages were $1,000 and your deductible is $750, is it worth the risk of a claim in your file?
It doesn’t necessarily help to change insurance companies after a claim, either. CLUE, the Comprehensive Loss Underwriting Exchange, keeps a record of individual claims for seven years, and with a quick search, companies can decide you are not worth the risk to cover.
Don’t Be Canceled Due to Insurance Claims
- Before filing a claim, ask your agent what they think.
- Don’t contact your insurance company if the claim exceeds your deductible by less than $200 – it’s not worth the possible premium increase.
- Stay with the same company unless you have a valid reason to leave. Current customers are often given more flexibility than new potential policyholders.
- Bundle your policies with one company, and consider an umbrella policy. Companies are less likely to drop someone if it means losing multiple policies.
- Maintain your home and fix issues as they arise. The cost of doing so could save you a lot of money, inconvenience, and frustration in the long run.
- If you are buying a home, look into the property’s claim history. Insurance companies are wary of a house with previous structural or water-damage claims.
One of the best ways to ensure your insurance is there when you need it is to work with a local insurance broker. These professionals understand each insurance company’s policy and track record and can help you to make the best choice for your family.
Anderson & Associates Insurance Group is located in Palmetto, Florida.
