Property Insurance Coverage for Hard-to-Insure People
Rising insurance costs have hit everyone, but if you’re a high-risk customer, you could feel the biggest bite. Getting dropped, cancelled, or denied a policy is no laughing matter.
Fortunately, you needn’t cry either. You might have trouble getting insured, admits Bob Hunter, director of insurance for Consumer Federation of America (CFA). But it’s not impossible. In some cases, you can even prove your innocence. You just need to know how the system works.
So what Raises your Risk in the Eyes of Insurance Companies?
Here’s the breakdown.
- Number of accidents and tickets — A few of these and your auto insurer will dub you an irresponsible driver. Almost every company looks at this.
- Home condition — Maintenance concerns, such as outdated wiring or badly needed repairs, make homes more hazardous.
- Credit history and rating — Insurance companies claim a link between bad credit and insurance risk. If I get laid off and fall behind on some bills, why am I a worse driver or homeowner?. Unfortunately, many insurers think there’s a connection.
- Previous carriers — Who insured you in the past? If you bought costly insurance from high-risk insurers, your new comp any may count that against you.
- Age — Older adults often earn price breaks on their homeowners insurance, but their auto generally goes up after age 70, says Hunter.
Check your credit reports. The CFA recently reviewed 500,000 credit scores and discovered 20 percent of them were wrong. “We found all kinds of errors in the credit scores,” he says. An insurer might refuse you or drop your policy based on these mistakes.
Review your report at least once a year to make sure it’s accurate. Learn how to order credit reports and fix errors in Rebuild your credit rating in the Consumer credit chapter.
Shop around. “Some companies don’t use your age or credit scoring, so it pays to shop around,” explains Hunter. He suggests getting quotes from at least three regular insurers, even if you think you’re high risk. Most major carriers operate high-risk companies, too. So if the regulars turn you down, ask about their higher-risk counterparts.
Complain to your insurance company. Getting dropped or cancelled doesn’t doom you. Mistakes happen and insurers are no exception. They may have the wrong facts,” Hunter notes. This can happen if they used your credit report. First, ask them why they denied you. Then write a formal letter of complaint. Keep copies of any correspondence you send or receive.
Take it to the state. You probably don’t have cause for complaint if you have had multiple accidents or tickets, or if you are nearly blind. But if a carrier denies you coverage based on age or credit score, or cancels your policy after only one claim, you have every right to fight back.
Contact your state insurance commissioner’s office. You can file a complaint with them by phone, fill out an online form, or mail a letter detailing what happened.
Whichever you choose, explain the situation objectively, Hunter advises. Don’t lose your temper. Simply state the facts as you understand them. You may want to include copies of any correspondence between you and the insurer regarding your coverage.
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Category: Housing
