In the aftermath of a storm that battered her Fort Worth, Texas home last year, Becky Lane called up her insurance provider to ask about her toppled fence. Ultimately, she decided not to file a claim — the repairs just didn’t meet her deductible.
What should have been a straightforward conversation with her insurer of 44 years, Liberty Mutual, led to an unexpected spike in her insurance rates.
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When she recently called back to ask why her rates had increased so much, the company pointed to an earlier claim for roof damage — and a claim for the fence. It seemed an agent had allegedly added an open claim to her record just because she asked a few questions.
“This wasn’t fair. This was not right,” Lane told Fox 4 Dallas, expressing her frustration and concern that others in her age group might not realize they are being charged for such mistakes.
Determined to resolve the issue, Lane contacted reporter Steve Noviello to intervene. In a letter to Lane, the company confirmed there had been “no inspection or payment,” and they removed the erroneous claim from her records, which brought her insurance rate back down.
Auto and home insurance rates can increase without warning for various reasons, but as Lane’s experience shows, you have more control over them than you realize.
Reasons insurance rates change — including claims
Most homeowners have insurance for their primary residence. While it is required for those with an active mortgage — to protect the lender in the event of an accident — it’s always a good idea to have a policy in case of an accident or natural disaster.
Your homeowner’s insurance rate is based on several factors: the age of your home, its condition when purchased, its location and how much it would cost to rebuild. Your premium may increase if you make major home improvements that increase value, the cost of building materials increases or if you have increased risk features, like a trampoline or a pool.
Your credit and claim histories also affect the premium. Insurance companies use a credit-based insurance score to predict future claims. The higher your risk, the more you could pay for insurance.
A previously filed claim on your record may also cause insurance rates to increase as it suggests you might file for more in the future. While one claim often results in a higher price, several could cause the insurance company to drastically raise premiums or send homeowners a notice of non-renewal.
Unfortunately, a homeowner’s claim history can follow them when they decide to shop around for a new insurance provider. Specialty consumer reporting companies like CLUE keep track of both auto and home claims filed over a seven-year period, which is then provided to insurance companies upon request.
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Avoiding rate hikes over erroneous or canceled claims
Insurance claims are the one thing homeowners can control when it comes to their insurance premiums. When looking at a loss on your home — from natural disaster to burglary — the first question to ask is always: “Does this situation require an insurance claim?”
Before calling the insurance company, start doing your own research. If there were no injuries, nobody else’s property was affected and the repair or replacement amount is less than your deductible, then there’s no need to file a claim. Paying out of pocket to fix the problem is not only cheaper but can prevent your rates from going up. Even if Lane’s case was an outlier, you can always consult your insurance company, too, if something unexpected comes up.
In the case where there’s an error on your policy, call the insurance company to ask for more information, including a claim number, when the alleged claim was filed, and how much was paid on the claim. You can also request to see your CLUE report directly from LexisNexis to see if claim information was added to your consumer report.
Should your insurance company be unwilling to work with you to resolve the issue, you still have options. Filing a complaint with your state’s insurance commissioner or attorney general can help sort out consumer protection issues, including erroneous insurance claims.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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