For those who may not already know it's not a good idea to make too many claims on your homeowners insurance policy. The reason is simple... your insurer could raise your rates and even worse drop you entirely. Insurance companies have a typical method to evaluate the risks in providing coverage to you. If you are not considered a high-risk individual, you will pay a lower premium.
It is possible that filing a claim may also make your home unmarketable. What's more, you could find your home's value damaged or if it is on the market a sale could be jeopardized even if a previous owner made a claim, and not you!
More and more insurers are using a huge industry database, called the Comprehensive Loss Underwriting Exchange, or CLUE, to drop or deny coverage based on a home's history of claims or damage reports. Insurance companies fear the rising costs of claims being made for water and mold damage. One reporting of such a claim may be enough for an insurance company to drop you.
The name of the company that operates CLUE, ChoicePoint of Alpharetta, Ga., said that the database collects damage reports as well as claims. The information stays in the database for up to five years.
Previously, insurers used the CLUE database largely to watch for fraud and for consumers who had a history of filing numerous claims. Most recently insurance companies have become more aggressive about screening for other risks -- including damaged homes that could spawn future claims.
While there are no guarantees, there are a few steps that may help you avoid higher rates resulting from a claim.
- Contact your insurance company directly and inform them about the event resulting in your claim. You will typically forms for filing claims in the back of your policy that is mailed to you.
- Read the form carefully, you want to be sure to fill out these forms correctly. If you are filing a claim for homeowners insurance make sure you do not alter the condition of the home after the event until the inspector has seen it. Only opt for emergency repairs to avoid further damage.
- Take photos whenever possible.
- Assess whether the damage done is worth filing a claim. Sometimes, not filing small claims would work in your favor. If you have a history of filing claims, your rates will certainly increase.
- Collect estimates of the repairs and keep your records updated.
- Consider if the deductible exceeds the claim amount before filing the claim.
- Finally, take advice from a reliable adjuster to file an insurance claim without having rates go up. They may be able to suggest the best ways to deal with specific situations.
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