Can’t Get Homeowners Insurance Because of Claims?

Homeowners insurance provides crucial financial protection for one of life’s most significant assets, safeguarding against unforeseen damages and liabilities. Securing this coverage can be challenging, particularly for individuals with a history of past claims. Insurers carefully evaluate an applicant’s claims record, which can lead to increased premiums or even denial of coverage. This article guides homeowners through understanding claims history, accessing reports, and strategies for obtaining insurance with prior claims.

How Past Homeowner Claims Affect Insurability

Insurance companies assess risk, and a homeowner’s claims history indicates potential future losses. This directly influences their underwriting decisions and the premiums they charge. A history of multiple or significant claims signals a higher risk, potentially making a property less attractive to standard insurance providers.

Certain types of claims have a more pronounced impact on insurability. Water damage claims, often from plumbing failures or freezing pipes, are problematic. They can indicate underlying maintenance issues and a higher propensity for future, more expensive incidents like mold. Liability claims, such as those from dog bites or injuries on the property, are viewed seriously due to potential substantial financial payouts, including legal fees and medical costs. Fire claims, while often covered, represent a significant financial risk due to extensive damage.

Insurers consider both the frequency and severity of claims. Filing numerous small claims, even for minor issues, can be more detrimental than a single large claim. This may suggest a pattern of recurring problems or a tendency to use insurance for minor repairs that might otherwise be covered out-of-pocket. Many insurance companies may decline to insure properties with two or more claims within a five-year period. They view frequent claims as a precursor to more substantial future losses. The typical look-back period for claims history ranges from five to seven years.

A property’s claims history can also affect new owners. If claims were filed on a home by a previous owner, these incidents can appear on the property’s record. This influences insurability and premium rates for subsequent buyers. Even an inquiry about a potential claim that does not result in a payout can sometimes be recorded and impact future insurance applications.

Obtaining and Reviewing Your Claims History

Accessing your personal claims history is a crucial step to understand how past incidents might affect your homeowners insurance options. The primary resource for this information is the Comprehensive Loss Underwriting Exchange, known as a CLUE report. This report aggregates claims data reported by insurance companies for both properties and individuals. Insurers use this centralized record when underwriting new policies or renewing existing ones.

A CLUE report contains detailed information about past insurance losses. It lists the date and type of loss (e.g., water damage, fire, theft), the amount paid out by the insurer, and the claim’s status. The report also includes the name of the insurance company and the policy and claim numbers.

You are legally entitled to one free CLUE report annually from LexisNexis, the consumer reporting agency that maintains the database. You can request this report online, by calling their consumer assistance line, or by submitting a written request via email. Upon receiving your report, review it carefully for accuracy. Incorrect information, such as claims attributed to you that you did not file, or inaccurate dates or loss types, can negatively impact your insurability.

If you discover inaccuracies on your CLUE report, you have the right to dispute them with LexisNexis. The dispute process involves submitting a written request along with any supporting documentation. LexisNexis is required to investigate the disputed information, usually within 30 days, and correct any errors found.

Securing Homeowners Insurance with Prior Claims

Working with an independent insurance agent is an effective strategy when you have a history of claims. Independent agents have access to multiple insurance carriers and can shop around on your behalf. They often find options from insurers with more flexible underwriting guidelines for properties with prior claims. They can also provide valuable guidance on how to present your property and claims history.

When standard insurance providers are unwilling to offer coverage due to a claims history, exploring “non-standard” or “specialty” insurance carriers is a viable option. These insurers specialize in providing coverage for properties deemed higher risk. This includes those with multiple past claims or specific types of losses that standard carriers avoid. While premiums from non-standard carriers may be higher, they can provide essential coverage when traditional options are unavailable.

Another avenue for securing coverage, particularly when other options are exhausted, involves state-mandated programs like Fair Access to Insurance Requirements (FAIR) Plans. These plans serve as a last-resort insurance option for homeowners who cannot obtain coverage in the voluntary market. FAIR Plans are established by state governments to ensure that properties in high-risk areas or those with a history of claims can still access basic property insurance. Eligibility requirements and coverage limits vary by state. They generally provide coverage for perils like fire, extended coverage (windstorm, hail, explosion, riot), and vandalism.

When applying for new coverage with prior claims, transparency is paramount. Be prepared to provide detailed explanations for past claims, including any repairs or preventative measures taken to address the underlying issues. For example, if you had a water damage claim, providing documentation of plumbing upgrades or leak detection system installations can demonstrate a reduced risk to potential insurers. Demonstrating proactive property maintenance and improvements can help mitigate the perceived risk associated with past incidents. Insurers often conduct property inspections as part of the application process.