Filing a homeowners insurance claim doesn't always cost you your policy, but it is a possibility, particularly if you've filed claims before. Worse still, your claims history isn't a secret. CLUE -- the Comprehensive Loss Underwriting Exchange -- keeps a record of all the claims you've filed in the past five years. Other insurers have no trouble learning about them.
Companies can drop you or refuse you even if you've never filed a claim. After Hurricane Andrew hit South Florida in 1992, insurers cancelled as many policies as possible for fear of future losses, and nobody wanted to write new policies. The state had to create an insurance pool to pick up the slack. If you've lost your old policy, state pools or small regional companies may still be willing to write you a new one, but you'll end up paying a lot more.
If your neighborhood isn't particularly high risk, your insurer may not cancel your policy unless you file too many claims. Most insurers won't tell you what constitutes "too many," but the United Policyholders website says one claim in 10 years is safe. The more you exceed that level, the higher your risk of getting axed. If you've filed enough claims for one company to drop you, other insurers may pass you up too.
If you're buying or selling a home, the claims history on the house can also become a roadblock. CLUE not only tracks claims you make, it keeps records of how many claims have been filed on a property. If your claims history with your current house makes it uninsurable, the buyer may not be able to buy affordable insurance either. If you're buying, you may not be able to afford insurance for a house with multiple claims, even if the structure is sound.
Making as few claims as possible is one way to reduce the risk of becoming uninsurable. This is more affordable if you take the largest deductible you can afford. Even if your damage is above the deductible, CNN recommends eating the first $200 rather than filing a claim. If you bundle auto and life insurance coverage with your home insurer, you give the company a greater stake in keeping you. Anything you can do to protect your home and minimize small claims is a smart move.
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