Are You Hard to Insure?
What prompts an insurer to deny coverage? The reasons for rejection fall into a handful of categories, but they all boil down to one maddening fact: Companies don't like to sell insurance to people who are likely to use it.
In some cases, there isn't much you can do to remedy the situation — if you live in an active flood plain, for instance. But some things you do have control over. After all, do you really need that woodburning stove? Here's a list of things you might think about changing — if you can — plus a list of last resorts.
THINGS THAT WILL COST YOU
Exposure to things like earthquakes and floods is obviously a problem. But anything on your property that could bring about liability claims could also cost you. For example, you may be refused coverage or will certainly have to pay more if you own an unfenced swimming pool, expecially if it has a diving board or a water slide. State Farm considers a trampoline a potential risk.
The insurer may deem your home or neighborhood unsafe due to anything from the crime rate to the incidence of fire in buildings like yours. Insurers will certainly want to know if fire-resistant materials were used to construct your home — something to keep in mind if you're thinking of buying a fixer-upper. They will also check to see if you maintain your property. Signs of disrepair, such as cracked steps or a leaky roof will be taken into consideration when agents are deciding whether to write or renew a policy.
Believe it or not, unleashed or unfriendly dogs are seen by insurers as potential causes of liability claims. "If we investigate a home and find that a dog seems to be threatening, or if someone owns a pack of dogs," says State Farm spokesman Jerry Parsons, "then we might decline coverage."
Wood-burning stoves have become a much sought-after item among home shoppers looking for coziness or charm. But, due to danger of fire, insurers see nothing charming about them. If you own one, most companies will either increase your premium or, if you live in an area far from hydrants or a local fire station, may refuse your business altogether.
Heavy Claims Filing
As unfair as it seems, this is a primary reason for denying coverage. Insurers may consider several claims filed within a couple of years as a sign that you are not taking care to protect your home and possessions, or even that you are engaging in insurance fraud, says Peter van Aartrijk, a spokesman for the Council of Independent Insurance Agents. Many companies would rather see one very large claim than several small ones. Say you have a $50,000 claim in your recent past for damage from a house fire caused by faulty electrical wiring. You can probably find a new policy fairly easily, since in all likelihood the electrical system would have been brought up to current building codes in the course of repairs. But if every six months or so you file a claim for the loss of a ring, a watch or a set of golf clubs, finding a new homeowners policy is going to be something of a challenge. Try using an independent agent who will not only shop around for you, but can also make a case to underwriters that you are a responsible homeowner, and have just had a string of bad luck.
Where do you turn when no one else will have you? Check if your state offers a Fair Access to Insurance Requirements (FAIR) plan. FAIR plans are government-backed policies for folks who have been turned down everywhere else because their property is in a high-risk area. They are often more expensive and less comprehensive than standard policies, but may be your only option. Currently 35 states and the District of Columbia offer FAIR plans,