The Claim’s Been Paid — Why Can’t I Find New Insurance?

iStock_000015427495XSmallIf you have been the beneficiary of a claim payment on your home insurance, you might find that it will continue to show up in the future when you are seeking new coverage. In some circumstances, it might surprise you to know that even if the claim was paid before you owned the home, it can still affect you. For insurance companies, the claims history of a property or its owner is one of the most important tools in evaluating its future risk. As a result, you may be paying for the problems of the past, even when they are not your problems.

Insurance companies use a Consolidated Loss Underwriting Exchange (CLUE) report which is a database containing property insurance claims histories for the prior five years. While some homeowners have had problems based on the information in the CLUE report, you can also use it to your advantage. Prior to purchasing a home, you should consider asking the seller for a copy of the report. This will allow you to review any potential problems that you might encounter in insuring your new home. At the same time, it might also keep your seller honest about disclosing all potential issues with the home.

If you find information that is troubling on the CLUE report, you definitely need to address it with the seller. Prior claims for repairs should have resulted in actual repairs. You must not be shy about asking about these matters as they can cause you problems in the future. At the same time, even if the repairs were made, they can still raise eyebrows at your insurance company when you are seeking new coverage so you should carefully evaluate the information in the report.

If the issue with your home’s claims experience is fully known to you, then you will not be able to claim ignorance of it being a prior issue. Unfortunately, it is entirely possible that you might have some problems in the future with insurance. Insurers view homes with high losses as potentially risky and may be reluctant to continue offering insurance. However, they will not make this known to you so it’s not easily understood exactly how much you need to have in claims before they non-renew your policy. There’s no specific rule of thumb that tells you a certain number or value of claims will cause problems.

To put yourself in the best light when seeking coverage, try to view your policy from the perspective of the insurance company. Consider how much you pay in premium each year and how many years you have been paying premium to the same insurer. Then evaluate how much they have paid in claims to you. If the amount of claims greatly exceeds the premium total, you could stand out in their underwriting process.

Another important factor is how your repairs were handled. If the insurance company paid you to repair damages in your home, you need to make those repairs. There is an expectation on the part of the insurance company that they are insuring a fully-functional home. If you take the repair funds and spend them without repairing your home, it is a certainty that your policy will not be renewed at some point in the future regardless of where your policy is – Atlanta, Cleveland, Austin, Fresno, El Paso, etc.

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