• When frequent claims lead to insurance coverage denial

    8 avril 2020Christopher Johnson

    Filing a claim with your insurer following an accident or damage thinking that you will finally profit from the money you have invested might not actually be the best thing to do.

    Indeed filing frequent claims with your insurer can have dire consequences…

    In this article, Assurances Multi-Risques would like to make you aware of the impact of frequent claims, and hopefully spare you trouble!

     

    What do insurers consider to be over claiming?

    If you think that only the amount of your claim has an impact on your insurance coverage, you are wrong! Whatever the amount, whether it be $5,000$ or $500, it doesn’t matter to your insurer and neither does your level of accountability in the matter or the nature of the damage incurred.

    It’s the number of claims filed that in fact makes a difference to your insurer… Unfortunately, the number of claims allowed varies from one insurer to another. That means that we cannot therefore give you a clear figure as to what is the actual limit when it comes to the number of claims you may file.

    There is also the timeframe taken into consideration by the insurance company. Some companies will go back as much as 10 years while others will be much more flexible when evaluating your claims history.

     

    Frequent claims: The consequences

    First of all, you must know that a claim will necessarily increase your premium since you will automatically loose the rebate associated with the absence of claims on your record.

    Renewing an insurance contract following a claim is a rather simple procedure for an insurer. Things get more complicated, however, when several claims have been made over a short period of time. Faced with such a situation, the insurer may do one of the following things :

    • Increase your deductible or your premium ;
    • Require that you make certain changes to your situation (if, for example, you have been burglarized several times, your insurer may request that you install an alarm system) ;
    • In the worst case scenario, your insurer may decide not to renew your policy or to cancel your existing car, home or business policy.

     

    Why did your insurer refuse to renew your policy after several claims?

    In shock after learning that your insurer is refusing coverage, you are probably thinking that he only wants to pocket your money while avoiding any risk. Things, however, are not that simple.

    Your insurance company has duties of due diligence towards its other clients. That means that the company has an obligation to balance each premium it receives to the expenses it incurs in order to act in a fair and equitable manner towards all of its clients. If the company judges that your frequent claims have a negative impact on its equity, it may decide to suspend your coverage.

    Be aware that each company’s risk tolerance varies according to its size and value. Moreover, thanks to technology, your insurer now has access to various statistics in order to assess the insurance risk you pose, and the likelihood that you file another claim.

    If your insurer considers that you pose too high a risk, he is likely to refuse you coverage.

     

    How to avoid frequent claims ?

    We strongly advise that you contact your agent or broker before filing a claim. He or she will evaluate the situation with you and will be able to tell you if filing a claim is advantageous or not in the present case. A good insurance agent or broker will also be able to explain what impact filing a claim will have on your insurance record.

    Secondly, avoid filing small claims. Remember that the number of claims you make has a big impact when the time comes to renew your insurance contract.

    By doing these simple things, you can avoid having to eventually get insurance with a non-standard insurer who will have you pay high premiums.

     

    How to get coverage after an insurance non-renewal ?

    First, ask your insurer why he has decided not to renew your insurance contract. Once you know what the problem is, you can put the necessary corrective measures in place, if that is at all possible.

    Improving your risk management will increase your chances of finding a new insurer who will offer you quality coverage at a reasonable price.

    If, for example, you have to input corrective measures in your home following water damage, make sure to do so as quickly as possible in order, not only to avoid having trouble getting reinsured, but also to protect your home’s value.

     

    In conclusion

    If your insurer refuses to renew your contract or cancels it, please don’t panic. Contact us! One of our brokers who specializes in such cases will find you a non‑standard insurer who will offer you coverage until your situation returns to normal.

    By doing this, you will both save time by avoiding fruitless searches for a new insurer, and avoid getting a call from your bank asking you why your house is no longer insured.

    Once your situation is back to normal, we will be able to find you an insurer willing to take you on at a competitive price!