Does a Denied Home Insurance Claim Count Against You?

When a homeowner experiences property damage, concerns arise about the long-term impact of filing an insurance claim on their record. Many policyholders wonder how a claim, especially a denied one, might influence future coverage or premiums. Understanding how insurers track claim history, including denied claims and their potential consequences, is important for navigating home insurance.

How Insurers Track Home Insurance Claim History

Insurers rely on specialized databases to track a property’s and policyholder’s claims history, with the Comprehensive Loss Underwriting Exchange (CLUE) report being a primary tool. Generated by LexisNexis, this report compiles detailed information about past home insurance claims, including the date, type of loss, and any amount paid out, if applicable.

The CLUE report also records whether a claim was denied, even if no payment was made. This information typically remains on the report for up to seven years. Insurers access this data to assess risk when underwriting new policies or evaluating renewals. The presence of claims, including denied ones, provides a comprehensive view of a property’s loss history, influencing insurer decisions.

Implications of Denied Claims for Future Coverage

A denied claim on a CLUE report can influence a policyholder’s future insurance. While it generally does not directly increase premiums in the same way a paid claim might, its recording signals a loss event from the insurer’s perspective. Insurers use claims history to predict the likelihood of future claims, and a record of prior incidents, regardless of payout, can indicate an elevated risk profile.

A denied claim can contribute to an insurer viewing a policyholder as a higher risk, potentially influencing future premium rates. It might also affect a current insurer’s decision to non-renew a policy, especially with a pattern of multiple claims or severe loss events. Obtaining new coverage from a different insurer could become more challenging, as they will review the CLUE report during their underwriting process.

Denied Claims Versus Insurance Inquiries

Policyholders should understand the distinction between a denied claim and an insurance inquiry. A denied claim occurs when a formal claim has been filed with the insurer, but the company determines it does not meet the policy’s criteria for payment. This formal filing and subsequent denial are typically recorded on databases like the CLUE report.

An insurance inquiry, conversely, involves contacting an insurer to ask questions about coverage without formally reporting an incident or initiating a claim process. For example, a homeowner might call to understand if a specific type of damage would be covered before deciding whether to file. Such legitimate inquiries that do not result in a formal claim filing are not recorded on claims history reports. This distinction is important, as a casual question about coverage does not affect a policyholder’s record, unlike a reported incident leading to a denied claim.

Accessing and Reviewing Your Claims Report

Policyholders can access and review their claims history report for accuracy. Under the federal Fair Credit Reporting Act (FCRA), individuals are entitled to one free copy of their CLUE report annually from LexisNexis. This report can be requested by visiting the LexisNexis consumer website or by calling their consumer center.

When reviewing the report, check for accuracy of reported claims, including dates, types of loss, and claim status. If an inaccuracy or error is found, it can be disputed. The process involves contacting LexisNexis directly, which will investigate with the reporting insurance company. LexisNexis is required to respond to the dispute within 30 days, and if the information cannot be verified, it must be removed or corrected. Policyholders can also add a personal statement to their report to provide context for a claim, which will appear on future reports.