What Aren’t the Insurance Companies Telling You? Part 1

Is this how you keep your home insured without claims? The mailman feels better...

As insurance brokers, we have an insight into the insurance companies that the man-on-the-street doesn’t have. By using us, we can help you avoid, or at least understand, why insurance companies seem to have such arbitrary policies. Here’s 3 out of the top 10 things that insurance companies won’t tell you:

  1. Why, after 10 years without a claim, would a home insurer drop the customer from its “preferred” list when he filed two claims (one for burglary and one for a damaged roof) only worth $3,000? His risk profile hadn’t really changed, and he installed a burglar alarm and a home-security system. The homeowner ended up getting offered the company’s standard carrier at a higher rate, citing his “claims history”.
    It’s because almost all insurance companies slot their policies into different categories, based on a variety of factors, including your home’s location and credit scores. Let us shop around for you to find the best rate; a smaller insurance company might see you as a risk where a bigger company may put you in their preferred list.
  2. It’s pretty obvious that certain locations will prevent you from getting insurance; earthquake- or tornado-prone areas, for instance. But did you know that some insurers use illegal underwriting guidelines to “redline” (read: discriminate against) certain groups or locations. Agents get messages from their corporate office reminding them to stay away from couples whose marriage is on the rocks, or identifying undesirable ZIP codes to insure homes in.  A “favorite” memo of Bob Hunter, the director of insurance for the Consumer Federation of America, is where a company advised its agents: “Before writing a policy, drop by the house after work hours and see if the owner is sitting on his porch in a T-shirt and drinking beer.”
    And if you think you’re being discriminated against, you should raise a fuss. An elderly woman did, after purchasing a home with a companion and denied coverage because of “an additional non-relative listed as the named insured”. All other information was acceptable, according to the company’s agent report. After an attorney and the American Civil Liberties Union were called in, guess what happened? Oh yes, the insurance company apologized for the error and immediately offered coverage. What a surprise…
  3. Insurance companies are not known for being warm and fuzzy, nor being very forgiving. As they tighten their belts, these insurance companies are getting even more particular about who they will or won’t cover. And even one claim could get you tossed out; or worse, you don’t even have to claim at all to have your coverage terminated. And you’ll be like a rat with bubonic plague—no insurance company will touch you once you’ve been dropped. And if they do, they’ll make sure you pay for it.
    A Maryland financial planner learned this the hard way when his dog decided he didn’t like the appliance repairman and nipped him. When his insurance was up for renewal, he was shocked to find he was dropped. Dog bites are obviously red flags for insurers, so the man spent weeks calling insurance companies for coverage, but with no avail. Finally forced by his worried mortgage company to get some kind of insurance, the man had to join a special “insurance pool” that cost him five times more than his original policy. (See our previous blog for more about this practice!) Yet we’ve seen people dropped for reasons much less serious than a dog bite, and some insurers won’t cover existing clients if they start an in-home business, or perhaps miss a credit card payment or two…

Are you worried that you may be paying too much for home insurance? Suspect you’re being discriminated against? Call BMR Insurance Agency today for our free 30-Minute Insurance Makeover so we can make sure that you are getting the best coverage for the best price. Call us today on 714-838-1911 or just stop on by—we love seeing our clients in the office!

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