Insurance companies generally classify claims into two basic categories. Claims that are property specific and claims that are specific to you, the insured.
Property Specific claims….
These claims are situations that occur which put the insurability of the home into question. For example, if there are a couple recent plumbing related water losses on the home, perhaps the home has some significant plumbing issues which needs to be addressed. Many times, insurance companies are not willing to insure homes in these situations. If they are willing to insure the home, they’ll charge higher rates due to the increased risk of future plumbing related losses.
This can be frustrating to an insured because the claims may not necessarily be your fault but because the home presents a higher risk to the insurance company, you are the one who ultimately gets penalized with higher insurance rates. In fact, sometimes these property specific claims can cross over into our next category of claims too.
Insured Specific claims….
The second type of claim situations are claims which are specific to the insured. These are situations where something you did or did not do results in a claim event occurring. These claims can be frustrating for an insured because they feel like they are completely out of your control.
Here is a real-life example of one of these claims and how the insurance company looked at it for rating purposes:
Recently, we had a customer call in for a quote on a second home. While going through the quoting process, it was mentioned that there was a claim event on their primary residence in another state. The claim was caused by an AC drain line getting clogged and water backing up causing roughly $10,000 in damage to the home. The customer did not quite understand why the insurance company would want to know about that claim or why it even mattered.
Why it matters…
AC companies recommend homeowners check AC drain lines every 30 days or so to ensure clogs do not occur. The drain line getting clogged could be indicative of the homeowner not checking the AC drain line every 30 days which could also be indicative of other suggested maintenance to a home not being followed as well. The claim on the primary residence for this customer ultimately resulted in the claim free discount being removed from the quote for the second home here in Florida. The higher rate provides for the additional premium to the insurance company to compensate for the additional risk of a proposed insured potentially not following a home maintenance plan.
As crazy as it sounds, this claim will be on this customers claim history for up to five years.
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