01/09/2025
I am often asked if someone should file a Homeowner’s claim. My answer is always, "it depends." The culture now among many insurance companies is that they only want the cream on top and not the full glass. Meaning, they want those homeowners who have never filed a claim in 5-10-20+- years. I have had two clients in the past week call to say that their insurance company has chosen not to renew their policies simply because they filed a claim. The first claim a contractor left a roof exposed before a storm. Rain came in and damaged the inside of the property. Not the owner's fault. The insurance company will potentially recover 97% of what it pays out to my client, and yet, it has chosen to not renew their policy because of the one and only one claim.
The second client owns rental property. One of the tenants might have not disposed of smoking material properly. A fire resulted and the insurance company has decided not to renew the policy in the middle of the claim? There is no history of claims being filed on this property and yet this first and only claim triggered the non-renewal. How do you find another insurance company to cover your building when you are in the middle of claim and trying to rebuild? In many cases, you can’t. You may have to go into the Surplus market and get less coverage for more money. Who pays for that extra cost?
The system is not perfect. Few are. However, we pay premiums for the comfort and peace of mind to know that in many, not all cases, the insurance will cover the costs to repair or replace damage to our property. What we don’t pay for is for that insurance company to place us in a position where we lose additional money trying to find replacement coverage. There is a system in the Auto market that penalizes drivers for poor driving habits. However, if a tornado takes off your roof, a storm blows the tree over and hits your house, a pipe breaks or a lithium battery catches fire, are those reasons to not renewal a policy? They are the reasons why we have insurance in the first place.
So, the answer is, it depends. If the value of the claim is just a couple thousand over your deductible, and you get non-renewed or cancelled and hit with an increase in premiums that exceeds what you might collect, then no, don’t file the claim. Should you expect that any claim might result in a non-renewal or mid-term cancelation, yes. It doesn’t always happen but it seems more common these days then in the past.
There is a way to correct this wrong. Change the rules. The Commonwealth allows insurance companies to non-renew a policy for claim history. It is possible that even if your claim was denied you could still be non-renewed. It is unfair to expect homeowners to find another insurance company in the middle of a claim. If I buy something and use it, I don’t expect the manufacturer to take it back just because I used it. The same principle should be used in insurance. Granted there are situations where a non-renewal or cancellation is appropriate. We need the Commonwealth to step in and change the rules.
Shore Adjusting Services, Inc.
