Are Insurers Trying To Deter Homeowners From Filing Claims?

| Dec 16, 2017 | Homeowners' Concerns |

Here’s how homeowners insurance policies are supposed to work: The homeowner pays the premiums for the agreed-upon coverage. If a covered event occurs and the home is damaged, the insurance company pays out. After the matter is resolved, the homeowner continues to pay premiums and the insurer continues to provide coverage.

Unfortunately, a study from Rutgers University and United Policyholders has found serious problems with the last part of this equation, and it may be deterring homeowners from filing legitimate claims that should be covered by their policies.

Use It And Lose It

As reported by CBS News Moneywatch, the study found that homeowners who file claims for fire damage, storm damage or a similarly covered disaster may not be able to get their policies renewed the following year. The insurance company may drop them.

To make matters worse, the study found indication of collusion between insurance companies. They share information with each other, including claim information. When one insurance company drops a homeowner after filing a claim, the homeowner may find that other insurance companies are not willing to offer affordable coverage.

The study questions whether this is an intentional attempt at intimidation of policyholders. Do they want policy holders to be afraid of losing coverage if they file a claim? Do they hope this prevents legitimate claims?

Despite the report, another consumer group, the Consumer Federation of America, states that the risk of being dropped after filing a homeowners insurance claim is low. However, they do warn that increased premiums is a real risk.

Ultimately, homeowners need to proceed with care when filing a property damage claim. They should be aware that they have rights, including the right to file legitimate claims. That is what insurance is for. When claims are denied or insurers act unfairly, homeowners have the right to take action and push back.

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