Insurers May Cancel a Homeowners Policy, If You File a Claim

According to CNN Money, property insurance has always been a loss leader for the insurance industry, and now millions are finding themselves without a homeowners policy:

Non-renewals by insurance companies is a trend that's affecting homeowners far beyond the hurricane belt. A 2003 study by the Independent Insurance Agents & Brokers of America (IIABA) revealed that nearly 2.5 million Americans had lost their coverage during the previous two years.

Non-renewals follow two scenarios: The first involves homes in danger zones, such as flood plains or storm paths. Homeowners may lose their coverage whether they have made claims or not.

The second involves policyholders who file too many claims, the so-called "use it and lose it" phenomenon.

"It has been a very strange development," says Doug Heller, a spokesman for the Foundation for Taxpayer & Consumer Rights. "Consumers are being threatened with non-renewal for filing legitimate claims.""

Tips On Avoiding Non-Renewals:

• Be cautious filing smaller claims. If your loss exceeds your deductible by less than $200, consider paying out-of-pocket.
• Stick with one company: Companies may give long-term customers the benefit of the doubt and overlook minor blemishes on their records.
• Bundle coverage. If you have auto and life coverage with your home insurer, they may not want to jeopardize that business by cancelling your homeowners policy.
• Maintain your house. Upgrades of security systems, plumbing, and electricity, making sure the roof and gutters still function well, and trimming tall trees of dead branches can keep your house safer. Some upgrades even qualify for a premium discount.

Posted by Angie on May 26, 2005 | 0 Comments

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