Ways to Avoid Getting Dropped By Your Home Insurance Provider

From today's RealEstateJournal.com [WSJ],

Just as with auto insurance, homeowners have to worry that making a claim will get them dropped by their insurer. And that can mean higher premiums with another insurance company or, if you're deemed troublesome, with your state's high-risk pool. It might even mean no coverage at all. You'll also lose any loyalty or claims-free discounts you earned under your present coverage.

There's no firm rule for when or why an insurer will drop coverage but even one or two small claims can do the trick. That's especially true if the claim is water-related, which could mean mold in the future, writes Kimberly Lankford, a Kiplinger's magazine columnist, in her recent book "The Insurance Maze."

"What an underwriter gets concerned about is claim frequency," says Chris Heidrick, vice president for personal insurance with Firemen's Fund. "It starts to raise questions."

Consider raising your deductible as much as you can afford. You'll save money on premiums (as much as 25% if you raise a $250 deductible to $1,000). You can use your savings to increase your coverage and you'll be less tempted to make minor claims.

Even inquiring about whether to make a claim can hurt your reputation, says Lankford. Some companies will count such inquiries against you in a central database that other insurers can access. [more...]

This is a topic that comes up with clients all the time nowadays... Insurance companies are hyper-sensitive to ANY calls or inquiries on an account, especially related to water. A simple inquiry (even if you don't really have a problem) could result in a negative item on your C.L.U.E. report, which could result in future troubles not only for you as as the insured party, but for future owners of the house where the inquiry was based.

One would think that insurance companies are in business to help their high-dollar-paying customers, but if they are paying out claims, they're losing money, so they're really looking out for their own bottom line. Not yours.

My advice: run a higher deductible, such as $1,000 or even $10,000, and save your insurance premium money for when problems actually do occur. Then fix little items out of your own savings, without contacting your insurance company at all.

And NEVER call your insurance company unless you know for certain that you need their help. It could end up doing even more damage than the storm/wind/fire/water that caused you to make the call in the first place.

Ways to Avoid Getting Dropped By Your Home Insurance Provider [RealEstateJournal]
Insurers Offer Special Protection To High-End Homeowners [SFHomeBlog]
Quake insurance could get cheaper [SFHomeBlog]