7 Home Insurance Claims That Drive Insurers Crazy
Here at Trailstone Insurance, we insure more than 10,000 clients, and we have been seeing an alarming trend over the last two years in the insurance industry.
Some of the biggest insurance companies that you see advertised the most on TV are judging the types of claims the client has, not just the frequency or claim amount.
Ok, wait… what does this mean? Well, insurance companies are now charging you more based on the type of home insurance claim you have, the frequency, and the amount of the claim.
So, today, first we’ll talk about the 7 worst home insurance claims you can have, second, how to reduce these claims, and third, if you have one of these claims, how Trailstone Insurance Group can help you.
7 Worst Home Insurance Claims
1. Mysterious Disappearance
This type of claim is most associated with jewelry. It happens when a piece of jewelry has been misplaced, disappeared, stolen, or simply gone missing. This is considered a “mysterious disappearance” claim by your insurance company, but only if you had specific coverage for it as an endorsement, typically associated with Special Personal Property coverage or an Inland Marine policy on your jewelry. Most home insurance policies do not cover mysterious disappearance unless specifically listed.
Why is this claim hated by insurance companies? The cause of the claim is “mysterious,” and the insurance company does not know if the claim was a theft, a legitimate loss, carelessness, or insurance fraud. This claim will be on your record for 3-5 years and underwriters are skeptical of these claims.
2. Theft Claims
Theft claims also frustrate insurance companies. Underwriters often consider theft claims a reflection of the risk they are insuring. If a theft occurs, the underwriter may deem your location to be in a higher theft area or believe you should have installed an alarm system.
Example: Leaving your garage door open overnight and having items stolen generally would be covered, but the underwriter may think you were careless.
3. Water Damage
Most home insurance policies cover water damage from frozen pipes, backed-up toilets, and appliance failures. However, insurance companies feel many of these problems could be avoided with proper maintenance or homeowner care. This claim will be on your record for 3-5 years, and insurers worry the damage might not have been fully repaired, potentially leading to more claims.
4. Personal Liability
Personal liability coverage typically includes:
- Injuries on your property: If you’re legally responsible, it may help pay for someone else’s injuries that occur on your property.
- Damage to other people’s property: Applies if you or your household relatives are at fault for the damage.
- Lawsuits and lawyer/court fees: If you’re sued over an accident, it may help pay for legal expenses and settlements.
- Dog bites: Check if your insurer covers dog bites; many don’t or limit coverage to certain breeds.
Why disliked? Underwriters think the homeowner could have been careless, contributing to the claim.
5. Fire Claims
Fires are devastating, and insurance companies scrutinize the cause. If a fire is caused by carelessness, like daisy-chaining surge protectors with a space heater, the insurer will pay the claim but will be wary. Even fires not caused by the homeowner, like wildfires, result in large, expensive claims affecting your record.
6. $0 Claims
A $0 claim means you opened a claim, but the insurance company did not pay for any repair. Underwriters may think you decided to handle the damage yourself or did not repair the damage at all. This claim will still be on your record, and insurers are skeptical of such claims.
7. High Claim Frequency
Having a high claim frequency over the last 3-5 years can make you a bad risk in the eyes of underwriters. Too many claims can lead to denial of coverage. Check out my video on how many claims are too many.
Reducing These Claims
It’s important to make sure you will actually be using your insurance coverage for catastrophic losses, not expensive inconveniences. Here at Trailstone Insurance, we have a claims advocate manager to help assist you with the best way to proceed when you have a claim. We will help you determine the best option and ensure you are treated fairly by the insurance company.
Pro Tip: If you’re insured with a captive insurance carrier, be VERY careful calling your agent for advice because they will open a claim regardless of whether you want them to or not. As an independent agency, our claims advocate manager will advise you on the best way to proceed before opening a claim, helping you avoid $0 claims.
How Trailstone Insurance Group Can Help
We work with more than 40 insurance companies, meaning we have choices and many companies have different underwriting requirements. We will shop your home and auto insurance and find you the best option available, even if you have multiple claims or other underwriting issues.
Get started now with the link below.
Until next time we talk, stay safe and claims-free as best you can
FAQs
Why do insurance companies dislike mysterious disappearance claims?
Insurance companies are skeptical of mysterious disappearance claims because the cause of the claim is unclear, making it hard to determine if it was a theft, loss, carelessness, or fraud.
How can I reduce the risk of a theft claim?
Installing an alarm system and being mindful of securing your property, such as closing the garage door at night, can help reduce the risk of theft claims.
What should I do if I have water damage?
Ensure that the damage is fully repaired and maintain proper home upkeep to prevent future issues. Contact your insurer for advice on handling the claim properly.
Why do personal liability claims impact my insurance rates?
Underwriters believe personal liability claims can be caused by homeowner carelessness, which can lead to higher risks and more claims.
How can I avoid $0 claims?
Before opening a claim, consult with a claims advocate to determine if the claim amount exceeds your deductible. This can help you avoid having a $0 claim on your record.
Can Trailstone Insurance help if I have multiple claims?
Yes, Trailstone Insurance works with over 40 insurance companies and can shop around to find the best coverage and pricing, even if you have multiple claims.