When Filing a CLAIM on Homeowners Insurance RAISES your Rates!

Even though the purpose of insurance is to pay for CLAIMS there are certain circumstances when filing a claim will raise the rate, some of them are:

·        A claim has exceeded a specific threshold amount

·        Claims have increased in a particular region

·        An individual's claim history

There are some instances where filing a claim will raise the rate an individual pays for their homeowners insurance premium. Normally an insurance company will not raise a person's insurance rate after only one claim has been filed. Usually, a person's insurance rates will rise depending on how many claims have been filed in a specific time period or threshold. When insurers pay out for individual claims they may need to increase rates to make up for the amount they have already paid out. As a result a policyholder may see increased rates at their renewal.
If claims for a particular region have increased as the result of a storm such as a tornado an insurer can take a variety of actions. These actions can come in the form of rate increases. A rate increase not only affects individual's filing a claim but an entire state depending on an insurer's loss history. In order for an insurer to raise the rate on an insurance policy they are required to notify the state in which the rate increase will take effect. They can do this by using a specific provision which is either "file and use" or "use and file". The difference between the two is that under a file and use provision an individual state can deny the rate increase request.
An insurer has a few options available to them as the result of the amount of claims that have been paid out on a specific type of policy. If the amount of claims exceeds their threshold amount they can either non-renew individual policies, charge a higher premium or withdraw from a particular market. When an insurer withdraws from a particular market they stop selling new policies and non-renew existing policies as they expire.

Additional Living Expenses (ALE) - Homeowners

As Agents who answer homeowners’ insurance questions, we know that one of the most common concerns for our displaced customers is additional living expenses (ALE).

No matter how many questions we answer on the subject, there always seems to be another twist or turn in the issue. What is it that makes the ALE coverage so complicated?

For starters, it seems that the broadness of the coverage itself is a sticking point. The standard homeowner’s policy provides coverage for an increase in living expenses incurred by the insured so they can maintain their normal standard of living. That standard of living is the key; how the insured lived before the loss is what needs to be replicated after the loss. So any animals kept on the property get boarded, and if the insured has a swimming pool or hot tub, alternative living arrangements with similar items are required.

Another common issue is food. Some adjusters have balked at buying beer, wine, snacks, and such on the basis that these are not necessary or healthful foods. No matter, if this is what the insured typically eats, this is what the insured gets. If the insured is a gourmet cook and makes gourmet food every night, then once displaced the insured is entitled to gourmet food, even if it involves expensive, five-star restaurants.

The best way to look at ALE is to look at how the insured lived before the loss, and duplicate it as much as possible after the loss. Indoor pets get to stay indoors, and the insured can live on cake and cognac as long as this is how the insured lived before the loss.