Why Some Homeowner Insurance Losses Aren’t As Bad As Others
Today I had to give bad news to a very nice local couple who hoped we could save them money on their homeowner’s insurance policy. Although I might be able to work something out for them, they have three claims listed on their insurance credit history since 2013, which really hurts their chances, not to mention the fact that they own a German Shepherd.
One of our homeowner carriers has good rates but allows a German Shepherd only if the dog has completed an American Kennel Club (AKC) Good Citizen training program. The couple in question had their dog trained for obedience at two different canine schools, but neither one was AKC certified, so we couldn’t use that carrier. One of our other homeowner carriers allows German Shepherds without any training, but their rates tend to be more expensive. When I quoted the policy with that carrier, they didn’t refuse the risk, but they gave an outlandish premium, which had nothing to do with the German Shepherd, but everything to do with their three claims.
One of their claims was from 2013 and two were from 2015. The couple told me there was only one claim in 2015, but their insurance carrier decided to label them two separate claims since some of the water (ice dam) damage was witnessed in winter while the rest was found in the spring. Had this all been labeled a single claim, this couple would have been considered a better risk since there would have been one less homeowner claim on their record.
Unfortunately, none of their claims were tagged as having occurred during a “Catastrophic” claim period. Had that been the case, the homeowner would have benefited. When a claim is labeled a “Cat” loss, it means it occurred during an established catastrophic claim period when lots of other homeowners were similarly affected and filed claims. Imagine if an entire state or region were ravaged with bad weather in a
72-hour period and a multitude of claims occurred. Customers who filed claims during the “Cat” period would not have been viewed as being more risky since so many others also filed claims.
As I’ve mentioned in this insurance column previously, your strategy when buying homeowner’s insurance should be to file claims as infrequently as possible because if you file one too many claims, you might end up non-renewed (canceled). If that happens, you might be left with no choice other than the high-risk pool, where rates are often double what they are in the voluntary homeowner insurance marketplace. So my advice to you is as follows: (A) Don’t file any claims if you can help it and (B) When filing a claim, try to do so only when a big bad “Cat” comes to town.