August 17, 2008
Want to get in trouble with your home insurance company? Make a claim!
But paying claims is what insurance companies are for, you say.
No, it’s not. They’re in the business to make money, not spend it. Make the wrong kind of claim or too many claims and they’ll drop you like a hot rock.
Well, there are other insurance companies, you say. I’ll just, by golly, take my business elsewhere. Well, maybe not.
Because in addition to canceling your policy, they’ve registered you, your claim and even your house in the Big Brother’s Watching You and Knows What You Did Insurance Database, otherwise more correctly known as C.L.U.E., or Comprehensive Loss Underwriting Exchange.
The C.L.U.E. database includes the date, and what kind of loss it was and how much was paid for the loss. That sort of information can hurt you for five to seven years, because that’s how long C.L.U.E. keeps it.
Doesn’t seem fair does it. You’ve faithfully paid your insurance premiums for years and years, then the washing machine hose splits and spews water 20 feet across the laundry room and into the kitchen. Before you wake up or get home from work, that sort of thing can create anywhere from $2,000 to $20,000 to $120,000 in damages.
The little plastic ice-machine hose on my sister-in-law’s refrigerator split one night and when her husband got up for his second or third nightly trip to check the plumbing in the reading room (he’s much older than I am), he found himself paddling around in water the minute his feet hit the floor.
Their Colorado home is tri-level and the malicious refrigerator lives on the middle floor, where it could damage both that floor and the one below. And it did.
They made one improvement, though. They replaced the plastic line for the ice-maker with one made of copper.
That claim was one insurance companies especially don’t like — those with water damage. Not handled correctly, all that water can lead to mold and mold is right up there at the top of the Insurance Company Horror List.
Mildew is not mold, it’s easy to clean up and unless you continuously eat it for breakfast, it won’t hurt you like mold will, unless you call your insurance company to make a mold claim. Even if you don’t make a claim after that, if your agent reports back to C.L.U.E., you and your house are liable to be blackballed in the insurance industry and your policy shot down, stomped on and canceled.
Especially since you had another claim a few years ago, when a limb came through the roof and you didn’t jump up there with a Florida Big Blue Tarp Roof ‘cause you wanted new living room furniture.
I saw this happen. The guy dragged the living room furniture to the hole and let the rain ruin it, so he could add it to the insurance claim. And they paid it, but that was back when insurance companies were riding high, making money and didn’t want to lose market share.
Wouldn’t happen now. They’d reluctantly pay to patch the roof, not replace it and deny the furniture claim — before they canceled the policy. And while a hard search might turn up a company willing to insure the house, the premiums would probably be enough to buy a good used car. Every year.
It gets worse. A coupla years later, you decide to sell the house and buy another one. Yours is under contract to sell and you’ve put a contract on another one. Both are to close on the same day.
Because you’ve always gotten insurance a day after calling your agent, both you and the guy buying your house wait until the last minute for that chore. And because of your claims, you can’t get insurance on your new home and he can’t get insurance on your old one because of your personal claims and the involvement of your house in them. And without insurance, the mortgage company will sit on its money.
Think I’m exaggerating? I’m not. That’s happened and because of the whopping losses insurance companies have had recently, there’s gonna be a lot more of it down the road. I guarantee it.
Here’s what you can do to avoid that. Don’t make small claims. I’d be hesitant about making any claims under $4,000 to $5,000 and if water or mold is involved, it might be worth it to go even higher.
Raise your deductible significantly. You won’t be making small claims, anyway, and a higher deductible means lower premiums.
Protect yourself and your house by maintaining it. Making a claim because your fancy $2,000 BBQ grill fell through rotten boards on your deck, burned itself up, along with half the deck, won’t fly anymore. You should have fixed the boards.
Your defense against skittish insurance companies and the nosiness of C.L.U.E.? Probably the company that runs C.L.U.E. — ChoicePoint, which also runs ChoiceTrust (www.choicetrust.com).
I’m not sure I like it, but if ChoiceTrust is willing to troll through millions of public records for what feels like an invasion of my privacy, I might as well use their information to invade your privacy, if I need the claims history for your house.
Mike Hill has been in the real estate business in Valdosta since 1976, and because of today’s growing databases can no longer blame an evil twin brother for things he shouldn’t have done.