Filing Home Insurance Claims Can Cost You
December 6, 2007
Homeowners may not be aware of this but if three or more small claims are filed on a homeowner’s policy the insurance carrier can increase the premiums. In some cases, they can even deny to renew the policy.
The reason that insurers are giving for this practice is that even small claims cost them money as they have to be processed and expensed. Homeowners who file more than three claims are considered to be cost prohibitive and they can be dropped by the insurer. This seems to be especially true if the claims are related to water damage which can often lead to future associated problems with the home.
The California Insurance Department studied this issue and of those insurers that it surveyed, 25 percent had refused to renew policies of those who filed one or two non-water-damage claims in the preceding three years. 32 percent had refused to renew customers who had filed one or two water-related claims.
Homeowners should also understand that in the event one insurer decides to drop the policy, the homeowner may not find it so easy to get another one with another company. Many insurers are now using what is called the Comprehensive Loss Underwriting Exchange (CLUE) database from ChoicePoint. This database keeps information on claims for at least five years.