At this point, you’ve made the decision on the right insurance company, the type of coverage you want, the type of policy that best fits your needs and the actions you can take to keep your premium costs down. This, however, is no time to file the policy away and forget it. As you make incremental alterations and improvements on your house, your policy should change right along with it.
A. Your Policy’s Upkeep
- Pay the premium on time – This is the most likely reason coverage may be dropped on an insurance policy. A few insurers may offer a small grace period, but most are sticklers for premium deadlines and will not cut you a break for lateness.
- Keep an up-to-date paper trail – Be sure to organize and file all of your signed insurance documents or other paperwork you received in the mail from your insurance carrier, including the policy document itself, correspondence, copies of advertisements, premium payment receipts, notes of conversations about claim activity
- Make a detailed inventory of your possessions – Go from room to room in your home and write down everything of value that you would want replaced in the event of theft or calamity, such as jewelry, antiques, furniture, appliances, electronics, firearms and collectibles. For even more thorough accounting, take pictures or videos of everything.
- Keep inventory list offsite – To make sure you can find the list following a disaster, try to store your home inventory in a secure place at another location, such as your workplace, a safe deposit box or at a relative’s house. The advent of cloud computing is making it easier to store this information in digital form on a secure server.
- Maintain your home – A homeowners policy isn’t a maintenance contract; it insures against damage from perils such as fire, wind and hail. It doesn’t pay to repair items that simply wear out, like rotted porch railings. You’re responsible for the upkeep of your home, such as repairing your roof when it begins to leak or cleaning your chimney flue so it doesn’t catch fire.
Each year, try to make a point of reviewing your written and/or photographic inventory and make updates as you add or subtract new valuables in your home. You could make it part of your New Year’s ritual by adding it to your list of resolutions. Keep receipts with your home inventory for all repairs you may have made in the last year that could add to the value of your property.
As you make incremental alterations and improvements on your house, your policy should change right along with it
B. Filing a Claim
In the event that you do experience a loss, here are some quick things to do before you make the call to your insurance company’s claims center:
- Read your policy again – Before making a formal claim, try to determine whether the damage is covered on you own. If the cost to repair the damage is not much more than your deductible, you might want to pay for the repairs without filing a claim. How often you file a claim and the types of claims you file can significantly impact your premium and influence your insurer’s decision to renew you.
- Ask about forms or documents you’ll need – If you decide to go ahead with the claim, make sure you get a clear description of the exact forms you need to fill out in order to process the claim.
- Protect the home from further damage – If the house is unsafe, don’t try to be a hero by reentering it. But if the situation is stable, help minimize the damage by boarding up windows, spreading tarps to protect damaged areas from rain, clean up water from a backed-up drain, etc. Do what you can within reason.
- Cooperate with the adjuster – Once the adjuster arrives to assess the damage, do a walk-through inspection together and discuss his or her impressions. Take very careful notes and remember the dates of your conversations so you can ensure there is a record of each visit.
C. Solving Disagreements
Adjusters can be an enormous help in times of crisis, but remember that part of their job is to limit exposure to losses for their employers. Not every claim goes smoothly, and sometimes you will be denied coverage. But remember: Adjusters don’t always have the last word.
- Don’t give in too quickly. If there are disagreements between you and the adjuster, don’t feel pressured into accepting the first assessment. Instead of arguing directly with the adjuster, try to resolve your concerns with your insurer before getting third parties involved, which can slow down the process considerably.
- Gather evidence to support your side. Collect documents, save receipts, take photos, and write a detailed account of your complaint. All of your efforts will enable you to make the a well-reasoned argument that you can then submit to the insurer, asking them to reconsider. Oh, and remember to make copies of everything!
- Invoke the appraisal clause. If the disagreement continues, find out if there’s an appraisal clause in your policy. This clause allows either you or the insurer to bring in a third-party adjuster to make a binding decision on the dispute.
- Call the state insurance department. If this fails, contact your state insurance department to lodge a formal complaint. The state agency has consumer services staff who can help make your case against the insurer and aid in negotiations.
- Hire an independent, or public, adjuster. Contact the National Association of Independent Insurance Adjusters (NAIIA) to find an adjuster who is not bound to any particular insurance company and is trained to help broker an agreement. You can expect the fee for the public adjuster’s services to be about 10 to 15 percent of whatever settlement you get.
- Lawyer up. If all else fails, hire a lawyer to step in, investigate the incident and, if need be, argue the case for you. This, of course, would be the most expensive option, with legal fees taking up even more of any settlement you might win.
D. Cancelling or Losing Your Insurance
You always have the right to cancel your policy for any reason. However, after an initial trial period, usually 60 days from the opening of the policies, insurance companies must give you a reason for canceling you. Acceptable reasons include:
- Late or nonpayment of premiums;
- Providing the insurer with fraudulent information on your application;
- Conviction of a crime that may increase the risk to the insurers (e.g., the illegal storage of fireworks or explosives on the property);
- Willful disregard for the safety of the property, which may increase risk (e.g., ignoring a gas leak); or
- Changes to the property that could void the policy (e.g., physical modifications or additions that threaten the stability of the structure or local codes; leaving the house vacant for more than 60 consecutive days, making the structure more prone to vandalism, etc.).
remember: Adjusters don’t always have the last word
It’s important to note the key differences between an insurance company cancellation and a nonrenewal.
- Cancellation means either you or your insurance company stopped the coverage before the policy’s normal expiration date, which is usually 12 months after the policy starts.
- Nonrenewal means the company refuses to renew your policy after it expires. Insurance companies generally have the right to not renew your policy if they so please.
If your insurance company cancels your policy, it must give you notice. The number of days varies by state, but it’s generally in the neighborhood of 30 days. If you or the insurer cancels your policy, the company could refund a portion of your premium. Your insurer must also give notice (again, typically 30 days) before it chooses not to renew your policy. You should also ask the insurer for the reason behind the nonrenewal.
Your insurer must also give notice (again, typically 30 days) before it chooses not to renew your policy
E. What if You Can’t Find Insurance?
There are some regions of the country – like the Gulf Coast – that carry so much risk of damage from covered perils, such as hurricane wind damage, that most insurance companies won’t offer coverage. This practice can get extreme, as was the case with State Farm’s complete withdrawal from Florida in 2009.
If this happens, go to the NAIC map page and click to find your appropriate state insurance department. Each of these departments can let you know if your state has a Fair Access to Insurance Requirement (FAIR) Plan, “wind pool,” or other so-called nonprofit “residual market mechanisms” that will take on high-risk properties no private insurer will touch.