Every month for more years than you care to remember, you religiously paid your homeowners insurance. Then, one day, you move your $1,200 flat screen TV downstairs to the family room. The TV slips and crashes to the floor! You now have a $1,200 pile of junk. Not a problem. You do as any good homeowner does. You file a claim against your insurance policy. They pay. You're happy.
Two weeks later, lightning strikes your property and fries the well pump. It's happened. I've been there. Once again, you file a claim. Let's not forget the $700 roof repair two years ago. Then, while you're enjoying your flat screen, a letter comes in the mail. It's from your insurance company. Sorry, Charlie, as the old tuna commercial says. They're not going to renew your policy.
What's going on here? Frankly, your insurance company has decided you're a bad risk. You've filed too many claims in too short a period. Can the company cancel you just like that? You bet.
Let's review: Homeowners buy insurance to protect their home and belongings from a variety of disasters, both big and small. Some may be as significant as tornado damage, or as mundane as Aunt Betty tripping on the walkway and breaking her big toe. (OK, it's mundane for you, but not for Aunt Betty.)
Filing a claim, or multiple claims, is a tricky business. Too many claims can mean an increase in your premiums. Other times, it means cancellation or non-renewal. Before you file a claim, think long and hard. Some claims are not worth filing. Let's take the flat screen TV for instance. It cost $1,200. Your deductible was $500. So, the insurance company is paying only $700. Your well pump costs only $1,000. You know where I'm going with this, right? You saved a little cash, but was it worth it? I think not.
Read on. You can thank me later.