Did you read right? Yes! Other people’s claims could have very adverse effects on your homeowners’ insurance rate. Although most people do NOT take the time to consider this when they should, I’ll show you how it does make you pay a lot more and what you can do.
If you’ve had much to do with insurance you’ll agree with me that your claims history has a serious impact on your rates — Be it auto, home or others. This is because insurers have data to show that once a person ever files a claim, the likelihood that they’ll do so again is higher.
In the same way, they’ve discovered that homes that have had several claims made on it will likely attract more claims in the future. Their simple argument is that recurrent claims of a particular kind could be an indication of a fault in construction. And if this is the case, then such a fault will lead to even more claims in the future.
For example, if a home has had repeated water damage claims which is due to faulty plumbing, such damage will repeat in the future making more claims inevitable.
And since this is so, your insurer will have no option but to protect itself from such a “problem home.” And guess how they do it? They slam you with higher rates.
So before you pay for that new home, ask for a CLUE (Comprehensive Loss Underwriting Exchange) report. You might think you’ve got a good deal only to pay hefty home insurance premiums because the previous owner made too many claims.
What if you fix whatever leads to the claims? Although this may help, there’s really no guarantee — At least initially because your insurer has very limited time to evaluate your application. Your home loss history is an easier resource to fall back to. However, discuss this with your agent.
While taking your time to ensure you find out more about the home you buy, it’s quite smart to also do comparison shopping. Don’t just settle for one insurer. You could easily shave off a few hundred dollars off your premiums over a couple of years. Therefore, get and compare quotes from a wide range of insurers.
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