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Property & Casualty Insurance/Policy Non-Renewal by American Family


Hi Richard - 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.

Richard, 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!

Hello Jim,

Thank you for considering to resolve your issue. I apologize the few days in delaying this answer, since I always answer all insurance consultations on Fridays (I have to keep my agenda organized this way due to my many training commitments that I have during the week).

Your situation represents an insurance paradigm that has been a major issue on all of us (including those of us who work in this insurance industry) who responsibly want to be insured and as well as you knows that every dollar spent in insurance is a dollar that we could you use to do something else with.

To file a claim or not to file a claim? Sometimes filing a claim or too many claims may have an adverse effect on how the insurance company will treat you price wise prospectively. You may have too many small claims (high frequency - low severity) or you can have only one huge claim (low frequency - high severity).

Either way, you may end up receiving an increase in your insurance rates. Insurance companies do have a threshold which will define if you are to be considered a high risk insured to them, hence an increase in your rates and premiums. In my experience I have seen rates sky rocket anywhere from 20% to 40%, due to scenarios like these.  Moreover I have seen cases in which the insurance company does not even want you anymore as a client (or insured) and you get a non-renewal notice.

There is no special law or regulation that forces and insurance company to insure someone.

Jim, it is important that always the client verify with the insurance producer and insurance company what their claims management and post claim scenario policy is long before you need to file a claim.  Policies in the way an insured is treated differ from one carrier to another.

For example, dog bites, personal and bodily injury claims, mold, fungus and/or water damage claims will raise special attention from insurance companies. On the other hand certain catastrophic acts of nature or the frequency of those might also have an impact (for example if you reside in Tornado Alley, hurricane or earthquake prone areas).

There are no set rules around rate hikes. Please do check with your state insurance department, since some states might require that insurers strictly follow the approved rates for that insurer.  But be aware, it may on the other hand, allow some leeway for them to go up or down according to loss history or major hazards.  In my state (Puerto Rico) insurance companies may go up to 25% or down 25% in other words, depending on the loss experience you may end up paying 75% - 100% or 125% of the applicable rates. It all depends.

If I were an insurance underwriter revising you situation and your insurability, I would most definitely consider giving you a lending hand and not hit you with increases. My opinion would be based:

1.  The 3/5/2012 claim is in reality a small claim (you also mention that it was a garbage truck back up, so I take it it was not your direct fault)

2.  The 1/2/2012 claim was zero payment (I would think the damages fell below deductible     levels)

3.  The 8/8/2010 wind claim is also a relatively small claim. It is not your wrong doing nor negligence

4.  The 7/15/2009 wind claim. Now that was a rather large claim, but then again not under your control nor due to your direct negligence

Jim, know this:  You can allege and fight for your right for consideration with your insurance carrier. Wind claims usually are not an insured's fault unless there is poor maintenance, poor construction materials, poor housekeeping or poor methods put into the construction or renovation of the structure.

Then again, what one insurance company forgives, another won't necessarily forget. Understanding the insurance company policies with regard to claims management is a must. Do they have first accident forgiveness?...Previous claims won't count towards you after certain number of years have lapsed, and so on.

Minimizing the number of claims is the key. Think about filing claims only towards catastrophic losses. A few portions of roofing blown off or a minor dent in the car maybe should be something you should take care off at your expense.

Now, it would be feasible to submit a claim if you had major damages to your home due to wind. This would probably prove financially catastrophic for you and your family, therefore go ahead and use your insurance (such as your 2009 wind claim).

You may also want to consider negotiating with your insurance company a higher deductible on your part. Make sure the amount representing this deductible may be put aside by you in an interest bearing savings account or similar account and use the same solely for catastrophic purposes.

In summary:

1. Check with state insurance department to see if any regulations exist that may preclude the insurance company to increase rates to adverse loss history

2. If allowed to do so, check up to what percentage of increase the insurance company is allowed to do that.

3. Negotiate with your current insurance company the terms. It seems to me that all claims you listed here were not your direct doing nor negligence.

4. Let them see what they have to offer and counter offer them with maybe a higher deductible on your end

5. Even though you've been with AmFam for over 24 years, unfortunately at the end it's all about math and making money. Maybe the relationship has blew out of proportion and it's time to find other alternatives.

I sure hope this information proves its purpose and surely hope you can make a lemonade out of this lemon. Please let me know if I can be of further assistance in anyway or manner.

I thank you for giving me the opportunity to be of assistance and wish you the best of luck in your negotiations.

Thank you very much!!

Richard L. Dunnam  

Property & Casualty Insurance

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Richard L. Dunnam, CIC, AAI, AMIM, AINS


Property and Casualty coverages and claims concerns. In either areas of personal or commercial insurance. In Spanish or English. Can provide solutions for concerns regarding coverage specific, services or general issues to the general public, claimants, insureds and for the insurance industry in whole, for the U.S. and/or Puerto Rico


English and Spanish fluent speaking professional with 28+ years of experience in following fields of insurance: commercial and personal lines underwriting, property and casualty claims adjuster, property and casualty insurance producer, insurance educational consultant approved by the Dept. of Insurance in Puerto Rico. Offer insurance continuing education and prep courses for insurance exams in Puerto Rico. Property and Casualty court expert witness for commercial and personal insurance. Real property insurance appraiser. Faculty member for the National Alliance for Insurance Education & Research, Certified Insurance Service Representative professional designation courses and Dynamics of Selling programs in Puerto Rico and the U.S.

Faculty for Professional Insurance Agents of Puerto Rico & the Caribbean Faculty for National Alliance for Insurance Education and Research Faculty for Sales Management Executives (Puerto Rico)

Impacto Seguro ("Insurance Impact") - Puerto Rico insurance publication Agent and Broker - monthly publication

Pursued the following: BBA Business Management - IAU - San Juan, PR Associate in Marine Insurance Associate in General Insurance Accredited Insurance Advisor (AAI) Certified Insurance Counselor (CIC) Marshall & Swift Trained Appraiser Chartered Property and Casualty Underwriter (currently 9 of 10 approved)

Past/Present Clients
Antilles Insurance Co. Universal Insurance Co. CNA Casualty Puero Rico (Integrand Assurance Co.) Colonial Insurance Agency Multitransport Co. AVIS Rental (PR) Puerto Rico Government dependencies and municipalities

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