Insurance is such a comforting thing. The word is delicious. It slips off the tongue like a mouthful of creme caramel. Being insured feels like wearing armor – or at least a generous application of Scotchguard.
What if a pipe bursts on the second floor and floods the bathroom and the living room under it? No matter, you’re insured. What if a tree limb falls on your garage and damages the roof? Never mind, you’re insured. Or are you?
If you call J.K. Simmons, of Farmers Insurance fame, beware of the one-strike rule. Two claims in two years, or even one claim, could result in non-renewal of your insurance. The avuncular J.K. is not so reassuring when he says your insurance is cancelled; often with little notice. Claim too often and you are dumb da-dumb dumb dumb dumb dumb.
One homeowner was recently 
informed that her insurance was not being renewed because she filed two claims in less than two years, despite the fact that the two claims totaled less than $6,000. Loss of homeowner’s insurance can lead to mortgage foreclosure. To make a bad situation worse, claim history applies to both the real estate and the owner. The Comprehensive Loss Underwriting Exchange (CLUE) and A-Plus track insurance claims nationwide and are reviewed every time a person applies for insurance. Too many claims will make it difficult sell the home to a new buyer and difficult for the person to buy and insure another home.
The homeowner was able to find a second-tier insurance company to insure her home, after being denied by all the big home insurers – Farmers, Allstate, Hartford, Nationwide, MetLife and Chubb. However, her equity was threatened because she could have difficulty selling her current home or purchasing another for at least the next year. Talk about a triple-whammy!
What is a homeowner to do? Here are five tips to stay out of trouble:
1) Raise your deductible and drop coverage for hazards that are unlikely to result in large losses. For example, mold remediaton is unlikely to cost more than $5,000 and probably would be much less. Filing a claim for mold remediation would cost you one strike and a second, much larger, claim within two years could cost much more. Set aside the money you save by raising the deductible and dropping coverage so you can self-pay relatively minor damage items. Raising your deductible to $5,000 will help you avoid the temptation to call the insurance company every time there is minor damage or loss.
2) Request and review CLUE and A-Plus reports annually by calling these numbers:
CLUE – 866 312 8076
A-Plus – 800 627 3487
3) Do not call your insurance company until you know how much repairs will cost and you have determined that you cannot cover the loss yourself. Calling to enquire about whether to file a claim may be recorded as a claim that will be reflected on your CLUE and A-Plus reports.
4) Inspect your home and surroundings for conditions that may give rise to damage or loss. Call a tree expert to evaluate the health of trees around your home and remove branches that may fall on your property. Have a plumber check your water supply and drain lines for potential problems. Make sure the electrical and HVAC systems are in good shape. Consider paying for home security monitoring; the cost is low compared to the risk of burglary or having your home go up in smoke. You cannot afford to be blasé about these hazards because your insured. Your insurance company will not inspect your home. You need to take that responsibility, yourself.
5) Annually review your property coverage with a trusted insurance agent. Although you may not have a local agent, your insurer will have advisers available to answer questions and give advice about coverage.
The odds are heavily weighted against customers in the insurance game. Television commercials by insurance companies stress the infinite variety of risks covered by their policies. They want you to think that their policies are available to give the customer aid and comfort at the drop of a piano or tree limb. Do not be fooled into thinking the company’s first priority is the customer’s well-being. Beware of getting too chummy with your insurance company’s claims department.
John B. Payne, Attorney
Garrison LawHouse, PC
Dearborn, Michigan 313.563.4900
Pittsburgh, Pennsylvania 800.220.7200
law-business.com
©2017 John B. Payne, Attorney
Off the Top o' My Head 