The homeowners insurance policy was never meant to be a home maintenance policy. The coverage is designed for sudden and unexpected large losses. In this current marketplace, homeowners need to be especially careful about filing a number of small claims over a short period of time. Most carriers have tightened their restrictions on the number of claims you can file before you are considered a higher risk customer or too high a risk, which could result in your homeowners policy being non-renewed.
Of course, the decision to file a claim for damage or a loss that is covered under your policy is ultimately up to you, but when it comes to repairing minor damage you may want to consider whether it's something you want to pay for out-of-pocket. Most people pay for minor car repairs all the time your home isn't really any different.
Homeowners Insurance Tips
Consider carrying a higher deductible. This will save you money on your premium and discourage you from filing small, petty claims that put you at greater risk for non-renewal.
Do routine home maintenance check ups. Preventing damage from water losses and other typical in-home disasters that can often be avoided may save you from future headaches and financial risk.
Learn your home's claims history. If you are buying an existing home, find out what claims have been filed in recent years. Water loss claims, for example, can impact whether the property is considered higher risk. The Comprehensive Loss Underwriting Exchange (CLUE) database, created by ChoicePoint Inc. in Georgia contains 90-96% of all homeowner claims nationwide, and reports are available online at www.choicetrust.com for a small fee.
If Your Homeowners Policy is Non-Renewed
There is a big difference between cancellation and non-renewal. Insurance companies cannot cancel a policy that has been in force for more than 60 days except:
- If you fail to pay the premium.
- If you have committed fraud or made serious misrepresentations on your application.
Non-renewal is a different matter. Either you or your insurance company can decide not to renew the policy when it expires. Depending on the state you live in, your insurance company must give you a certain number of days notice and explain the reason for non-renewal before it drops your policy. If you think the reason is unfair or want a further explanation, call the insurance company's consumer affairs division or the state department of insurance.
A policy could be non-renewed for a variety of reasons—from a company deciding to discontinue that line of insurance to a property no longer meeting an insurer's underwriting guidelines—so you shouldn't necessarily think the non-renewal is because of something you did. On the other hand, if you did do something that raised the insurance company's risk considerably, like committing fraud, your policy may not be renewed.
If your insurance company did not renew your policy, you will not necessarily be charged a higher premium at another insurance company. Click on the following links to sites that offer insurance company ratings.
Trouble Getting Coverage
If one or two insurers turn you down, don't despair. You do have other options. If you are buying a new home, ask the real estate agent, mortgage lender or builder for names of companies that write in your area. If it's an existing home, find out from the previous owners who insured the house. If you still can't find coverage, consider the following:
Ask for help from your current insurance professional.
Talk to the agent or company representative that previously insured your home or is currently insuring your car, boat or business. If the problem is not where the house is located, but the condition that it is in, find out what type of improvements or disaster-resistant features would be needed to make your home more insurable. The Insurance Institute for Business & Home Safety (IBHS) also provides information on natural hazards, community land use and ways you can protect your property from damage.
Talk to your neighbors and find out which insurers they use.
Get the names of any agents who may be knowledgeable about the specific risks in your neighborhood.
Call your state insurance department.
It can generally provide you with a list of insurers that write in your area, including higher risk insurance companies. It might also have information regarding community groups that help homeowners with insurance problems.