It could be that the company has updated it’s underwriting guidelines so that what was previously an acceptable risk is no longer so. Insurance companies often tweak their underwriting for various reasons - expand market, increase book of business, take on more risk, etc. If their loss ratio creeps upwards, they could drop high risk customers to compensate.
I think a good question is whether you were cancelled or if they declined to renew. I had a single large claim on a house with a different carrier. After repairs were completed, at renewal time my rate was increased 400%. Not a cancellation, not a decline to provide, but basically made it so I wouldn’t stay. I forget the name of the reporting entity but claims get tracked through there. Some companies will overlook a single claim no matter what it is but once the 2nd kicks in they look at all claims history.
If the original claim was small as you say, I would probably not have filed a claim. I think my deductible is $5K - I know for a fact I wouldn’t claim anything less. Even $10K I’d probably not claim to avoid the claims history.
I suspect it wasn’t a midterm cancellation but I could be wrong. Carriers can only do this under certain circumstances in most states. Typically these would include nonpayment of premium, material misrepresentation (or misstatement), substantial breach of contractual duties (or policy provisions), or material or substantial change in the risk assumed or an increase in hazard. After that it varies state by state.
You may be surprised to know that most P&C insurance companies (Auto/home) don’t make money from the premiums they collect. Industry wide in the US P&C combined ratios (ratio of losses, loss adjustment expenses, underwriting, etc. compared to premiums collected ) is right around 100%.
It’s my contention that going into the marketplace and hawking their wares obligates them to be transparent in the matter of whom they will sell them to, and under what conditions, thus allowing purchasers to make informed decisions.
Hahaha, no. They don’t even want to tell you exactly what your coverage is.
I could tell you claims stories that would make the baby Jesus cry.
How about my carpenter who had a house fire in January from his chimney, and they’re refusing to fix the chimney, even though he has full coverage and a letter from the Fire Marshall?
I’ll be at that meeting on Monday to clear up the situation.
Got the notice yesterday. There was another more recent claim this past year which I had forgotten about - and which I imagine spurred the decision not to renew. My numbers were off. All told, the 3 claims were under $30k, with the middle one $24k. I wonder how many times that we paid in premiums over 30 years, + the investment value of those premiums? :dubious: But, they are in it for the money, and they can choose to only collect premiums from folk who are least likely to expect anything in return. Capitalism - ain’t it grand!
Yeah, in retrospect we likely shouldn’t have filed the 1st or 3d, and going forward would likely not file for under $5-10k. We are at a point where we can consider ourselves self-insured for anything that size.
Little background. The first one - flooding, occurred during one of those 100-yr floods. As I recall, our agent was THRILLED to be able to cut us a check, because we were one of very few folk who had been paying a special flood rider to cover this exact sort of thing, and e was frustrated at having to tell so many folk “No.” And 15 years ago a couple grand was a lot more significant for us than it is now.
The most recent one was a lost piece of expensive jewelry. We thought long and hard about making a claim, and asked the agent’s office whether it would have any effect on our coverage, rates, etc. They assured us that it would not, saying “That’s why you have insurance.”
Thanks for the comments. They will help as we consider our options.
Yeah - we’ll likely do that going forward. Just bump up or “emergency cash fund” by $5-10k or so.
What bugs us is that we’ve always communicated openly with our agents as to whether or not we should file claims. For example, have not filed claims for small car damage, when kid’s bike was stolen, etc. Thought we were responsibly holding up our end of the ongoing business relationship.
I lived in an area that experienced a fair amount of flooding after a hurricane a few years ago. Not any sort of major national-news type disaster or anything, but there were a few hundred houses that got flooded, many of which were total write-offs. Our own house was completely fine, luckily, but despite that, our premium the next year increased by 40%. We hadn’t made a claim. We had done nothing wrong at all. They just decided to charge us 40% more.
When I called to complain, they said that the the local government had given them permission to recoup their losses by drastically increasing premiums across the board, so we were screwed. Now, silly me, I had always sort of assumed that the whole business model was to collect a whole lot of money from people, and then use some of that money to pay for claims. I further assumed that a smart insurance company would be careful to have a good supply of money available for when major disasters hit, and that they’d just have a somewhat smaller profit margin that year. HA HA HA HA no. How naive of me. If ANYTHING is going to suffer, it will NEVER be the almighty profit margin. Nope. They just raise prices to get back all of the money they had to spend on those pesky customer claims. I’d be willing to bet that they never quite remembered to drop the premiums in that area back down once they’d gotten their money back, too. We moved out not long after, so I don’t know.
Flood is a different product than typical home or auto. In CA at least, no carrier writes their own flood policies. All flood policies are underwritten by the state and sold through traditional carriers as riders. This is because claims are typically much larger and impact wide areas at a time.
As I said earlier - profit margins for P&C business is typically very low and often negative for their auto and home product lines.
Required capital for carriers is generally mandated, though major losses could still tank a given business. Rates are also controlled by most if not all states. If a carrier wants to increase premium this requires approval. Reinsurance will greatly assist risk mitigation for those 100 year floods or things like major earthquakes that have massive fires afterwards.
You can bet that after Fukishima world wide reinsurance rates were impacted.
Some shit-for-brains tried to kick in our front door last year; his attack cracked the door frame up through the second hinge, split the other side of the door frame near the strikeplate, and caused the door’s laminated layers to separate. After reviewing our claim (electronically – no one ever came out to actually see the extent of damage to the frame), State Farm determined that the cost to repair the door and frame would be just under $1000, which happened to be our deductible. :mad: (And since the shit-for-brains was a juvenile, he basically got away with it – no financial compensation there.)
And yes, it’s always good to avoid tiny claims – I can remember my parents discussing what to do about the freezer full of food we lost after Hurricane Fran. They ended up not filing a claim on that.
