Property & Casualty Insurance/American Family Denies Renewal Due to Claims
Hi Jay - I just received what looks like a form letter with our names & address cut and pasted at the top from a district underwriter at American Family informing us that our homeowners policy will not be renewed effective our anniversary date in early August due to the following claims listed below:
3/5/2012 Freeze/Water $1,285
1/2/2012 Wind zero
8/8/2010 Wind $3,337
7/15/2009 Wind $21,844
1) The 2009 claim was not wind but hailstones (coding error?) that were the size of apples which damaged 16 sections of vinyl siding and ruined the roof as determined by Am Fam's appraiser. It was not classified as catastrophic because the damage was limited to my suburb. Everybody in my neighborhood received new siding and/or roofs.
2) The 2010 claim appears on my CLUE report as catastrophic, which it was, wind driven rain that got in through by bedroom window and ran down the wall into the two rooms below. Also wind-driven rain through a gable vent into window frame of bedroom below. Both window & gable were properly repaired to prevent this from ever happening again & insurance repaired the water damage.
3) The 1/2/12 was a non-event that I never should have called in. A section of my siding was laying in the yard after a winter blizzard. Turned out to be a leftover piece from original installation that was wedged up there somewhere and the high wind dislodged and blew down. Should never have called it in and no payment made.
4) The 3/5/12 claim is coded wrong. It was a garbage disposal back-up that went undetected and ruined a finished basement bathroom cabinet & laminate counter top. At the time, my mother and youngest son had been simultaneously been diagnosed with cancer; we were overwhelmed and called it in to AmFam without thinking.
Jay, I have a customer of AmFam's for over 24 years with a good claim record prior to above. The house has no mortgage, high FICO and insurance score, on-time payments & no risk or liability issues. Do I dispute with underwriter, my agent, or the state insurance commissioner and what about coding errors? If not, how do I seek another insurer without my premiums going up astronomically and my insurability taking a major hit? My naivete about homeowners showed in two of the above claims and in my way-too-low deductible of $250. Any and all advice would be greatly appreciated. Thanks!
Sorry for the delay in responding. I've been in the process of moving so my evenings have been taken up with the back and forth trips. With us being impacted today by TS Andrea, I was trying to get ahead of the rain.
I have to compliment you right off the bat here. You are obviously well versed in insurance or have done your research. Not many people understand CLUE and Insurance Scoring.
As I look at your explanations of the details of each claim, I can clearly see that you have some very valid points regarding your pending non-renewal. Understand that companies always have form letters stored to increase efficiency when handling common situations. Non-renewals are one of those situations. There are parts of the letter that are scripted and some that pull data from within your electronic file and are inserted. It can make the letter look very mechanical...which it is.
In addition to the above, it is imperative that a company watch the claims experience of each policy and determine its profitability. Remember that insurance is a pooling of all premiums and contemplates an expected loss per policy (we call it an Average Annual Loss) as a predictor or expected profitability. While severity is evaluated based on the specific circumstances...not penalizing an insured for one bad loss...it is somewhat different with frequency (one insured having multiple small losses). The prevailing wisdom is that frequency breeds severity...in other words, the more claims someone has the more likely it is that they will have large loss.
Now...let's get to the important stuff...how we can possibly help you with your situation.
There are certain types of claims that are outside of your control. Acts of God....hail being one of them...are perils that cannot be predicted nor can you do anything to prevent such a loss. Some states even have insurance laws that prevent a company from canceling policies for losses related to catastrophes and Acts of God. This loss is definitely miscoded and that needs to be corrected.
Your 2010 loss surprises me a bit. Most policies exclude wind driven rain unless there is structural damage from the wind that allows the rain to enter. it's obviously not a very large loss, however, I'm sure it created a large loss ratio in comparison to your premium since you re located in Iowa rather than a more coastal state where premiums are much larger.
A reported claim that results in no payout and turns out to not really be a loss at all should NEVER be counted against you. That's the most ridiculous thing I have ever seen!!
I can understand the coding of the claim last claim. Insurance companies classify claims based on generalized circumstances. In this case, water is more the key to the loss rather than freeze. It's probably slightly miscoded but not enough to cause any concern.
Okay...so much for my individual analysis. Let's talk about what you can do.
My first question is...where is your agent in all of this? Have you talked to him or her? Are they going to bat for you with the company? You've been with AmFam for a VERY long time. As a loyal customer, there should be some level of clout that comes from that loyalty. Your agent should be in there battling on your behalf and talking to an underwriting supervisor or someone even higher than that to get this non-renewal reversed. I'm sure, based on your own admission, you would be willing to take a higher deductible as a condition of keeping your coverage in force. What if you were to agree to go to a $1,000 deductible? Would the company be willing to rescind the notice?
The hail claim should be thrown out in the overall analysis, as should the 1/2/2012 loss. Neither of those losses should be used against you. Moving to a larger deductible would eliminate one claim and reduce the other substantially. Plus...taking larger deductible shows the company that you're willing to assume some of the risk. Companies like that because it shows that you are willing to accept responsibility for losses rather than putting it all on them.
If that doesn't work, I would highly recommend filing a complaint with your State Department of Insurance. Companies hate that because they now have to respond to the regulator...unless of course they are doing something that is totally understandable. This is one of those that is easily remedied as stated above so it does not bode well with the regulator when they have to get involved. The regulator is there to protect the consumer and this is certainly not a very consumer-friendly decision.
Your biggest issue having to find another company will be the 2010 and the 3/2012 losses because they are water losses. Companies do not like risks with prior water losses because they are concerned about future issues with mold.
I hope that helps some, Jim. Speaking as a company VP, I would not hesitate making the decision to rescind the non-renewal based on the circumstances of the claims, your willingness to take more risk, and your longevity with the company if you were my customer.
Please let me know if you have more questions.