I had a great time at CPFC15 this past weekend, where a bunch of Personal Finance folk got together to discuss things and two of the speakers touched on points on Home Insurance that resonated with me:
- Rob Carrick from the Globe stated that the Insurance Industry needs to be put under higher scrutiny for some of their practices.
- Ellen Roseman mentioned about the folks that have contacted her about having their home insurance cancelled (for many reasons)
With these two points in mind I will share with you an upsetting story that happened to my mother, with her home insurance.
My parents have lived at the same address for more than 50 years, and they dutifully paid their home insurance premiums. There were a few small incidents in the house, but never any major claims until about 7 years ago. The water tank in the basement gave up the ghost in a spectacular way, and flooded the basement causing damage to the finished basement (dry wall, carpeting and clean up), so my parents made a claim due to this incident.
About a week after the “new” tank was put in, something went wrong with it, and it dumped its contents as well, so my Mother called the insurance company about that, and it was cleaned up as well.
The last straw (for the insurance companies) happened on my birthday about 2 years ago, when the oil tank in the basement leaked. The entire contents did not dump out, but it was a significant spill which caused a very large claim to clean all of it up.
Thanks to this, the next year the Home Insurance on my mother’s house came up, she was told she was “uninsurable” due to these 3 incidents (uninsurable by any main stream insurance company, as we found out after calling a few). This is someone who had paid their insurance rates, and had been a model customer, but thanks to these 3 incidents (which in my opinion is really only 2 incidents, as the second water tank giving way was a function of the first tank failure, but we were told that is not the case in the insurance industry), she was going to have to use “off market” home insurers.
Can I Get Insurance ?
In this world you can insure anything, and you can find folks who will insure anything, however, they do not do it for cheap. For the next 4 more years (at least) my Mother must use these “alternate insurers” to insure her home.
I tell this as a cautionary tale, be aware that your Home Insurance can be cancelled for many reasons and the “Three Strikes” rule is one of the ways this can happen.
Image courtesy of fantasista at FreeDigitalPhotos.net