Posted on 04/22/2005 8:45:59 AM PDT by Scenic Sounds
State tries to combat the cancellation of insurance policies
Dan and Christy Clancy were visiting Palm Springs when the theft happened.
A hotel valet had left their car door unlocked, and a thief took $1,436 worth of entertainment equipment.
But worse was yet to come.
After the Clancys filed a claim with Allstate Insurance, they were told that because it was their second claim in five years – they had filed a claim for $1,645 for wind and hail damage to their roof in 2001 – their homeowners policy would not be renewed.
"Two paid losses in the most recent five years are considered unacceptable frequency," Allstate told them.
When they protested, Allstate said it could provide them with a more restrictive policy for $1,800 a year – twice as much as they had been paying.
With a visit to the Clancys' house in Rancho Penasquitos yesterday, Insurance Commissioner John Garamendi used them as a centerpiece of his campaign to force insurers to warn customers that their policies may be canceled when they file claims.
"It is absurd that a homeowner should lose their policy just because they decide to use it," said Garamendi, who is promoting a package of regulations to combat the practice.
Each year, insurers in California cancel or refuse to renew 42,500 homeowners' insurance policies, representing about 1 in every 20 claims filed, according to industry statistics.
Some non-renewals involve policyholders who have stopped paying their premiums, failed to fix property damage or are suspected of fraud. Yet many, Garamendi charges, involve customers who have filed as few as one or two legitimate claims.
"My policy got canceled after just one claim, and they canceled the wrong house," said San Diego photographer Jeffrey Reiss Graves, who appeared with Garamendi and the Clancys. Graves said his insurer, Travelers, canceled the policy on a rental property because he had filed a $1,300 water damage claim at his residence.
In a letter, Travelers explained that his claim "represents a greater loss potential than we are willing to insure in this policy." After Graves complained to Garamendi, the company renewed coverage.
"I wish they had just told me what their policy was in the first place," Graves said. "I never got that type of information from them."
Under Garamendi's proposed regulations, which will be formally unveiled next week, insurers would have to tell customers about any negative action that would result from filing a claim. They would also have to tell the state how many customers they decline to insure each year – and why. And they would have to certify that their data bases on claims are accurate.
The insurance industry is already mobilizing to fight Garamendi.
"I don't want to say we're going to sue until we see the actual rules but, based on what he's described, he doesn't have the authority to do this," said Dan Dunmore, president of the Personal Insurance Federation of California.
Dunmore spent much of the afternoon yesterday with newly hired general counsel Ray Frazier, who successfully sued Garamendi the last time he tried to alter the industry's practices regarding non-renewals.
Obviously, Garamendi doesn't understand the basic principle of insurance - it's about premiums, not claims!!
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
In CA, you should consider homeowner's insurance to be something that you will use only once, for a truly catastrophic reason, cuz after that you will not be able to get it again. That is just a fact of life.
Allstate has been doing this for 50 years at least. My father had one auto claim and was promptly cancelled.
It's not fair that insurance companies should have assume any risk. Paying claims ruins their plans to install $50,000 birdseye maple, gilded doors on their office suites.
"I wish they had just told me what their policy was in the first place," Graves said. "I never got that type of information from them." That's the big differance in money COMIN' IN & money goin' out!!
""I wish they had just told me what their policy was in the first place," Graves said"
I'm sure that is specified in the small print.
Let's see, if you don't have insurance on a car or home that you owe money on, the financial institution will obtain coverage at outrageous cost to you to protect their investment. We're in a socisty where the insurance industry has you by the shorthairs to ensure they have a continuous source of business and you can make a statement like that with (i imagine) a straight face?
In any other venue in this country, paying someone or something for protection is called extortion.
Be it home, car, or medical - the American public would be better off if it were allowed to put the money aside for their own protection, and rely as little as possible insurance companies. The cost of premiums per month that one has to pay, if banked properly, could result in greater savings for those who make a claim a couple of times over the course of a lifetime. My guess one would get a great peace of mind in the long run knowing that the insurance companies will not be dictating which contractor, vendor, or doctor one must have in order to be "protected" under the insurer's umbrella. (It would also eliminate the insurance companies arrogance in dictating to home/farm owners that "if you don't paint your barn, we'll cancel your policy" type situations. (This happened to my elderly parents.))
Unfortunately, insurance companies use premium money to not only pay out fraud claims, but to pocket politicians and hire lawyers to lobby government officials to make laws forcing people to be insured (e.g. auto insurance and Ohio law).
As it stands now, insurance companies can take one's premiums and then cancel them on a whim without any ramifications whatsoever.
Is a casino legally permitted to deny paying out winnings to a patron who is not cheating but is winning too frequently?
I know they can deny the patron access, but once the bet is placed and the patron wins, they must pay out.
I think people need to be more aware of what they are signing with regard to insurance policies.
The rest of the crew was like a bunch of cats laying around and working at a very slow pace without the boss overseeing them. They were supposed to have the plywood on and covered with tar paper by the end of the following day, but five days later they still hadn't even completed the plywood. They had removed our TV antenna, so we couldn't see the weather forecasts, and they played their spanish speaking radio loud, but I couldn't understand it if they mentioned the weather. I awoke in the wee hours of the morning to the sound of a pounding rain storm. I went through the house looking at the ceilings and they were all getting huge wet stains on them. there is a second story over part of the house, and that is where the worst damage was done. Not only were the ceiling's and walls drenched, but there was water pouring through ventilation ducts and light fixtures.
Neither my husband or I have disability insurance but we were up on the roof in the rain and pitch dark putting up the couple of small tarps that we have. We could only cover a small portion of the exposed attic.
The insurance company covered the loss, which was about $20,000.00. And they didn't non-renew us. Later that year we had a burst pipe, which was the first claim that we had that wasn't caused by the insurance company, and after that they non renewed us. We couldn't find another company to cover us, and I had to go to our lender and ask who they send people to who have had claims. They sent us to a company that charges nearly $3,000,00 per year, where we had previously been paying about $800.00.
That's waaay too simple for the MBA's in the insurance industry to understand.
Too may people use insurance as a way to get someone else to pay for their own carelessness. Endless claims for things like "water damage" (and resulting mold, even without any evidence that it's doing any harm) force insurance companies to boot these people out -- occasionally booting out a few responsible people out along the way, since the insurance companies are subject to all our idiotic socialist "non-discrimination" laws.
Whose fault is it if your pipes freeze and burst, pouring water all over your walls, ceilings, and floors? Funny how this never happens to me, despite owning two homes in climates where this happens. I take responsibility for making SURE my pipes don't freeze. And when I see evidence of the tiniest leak in my roof, I fix it immediately at my own expense (for small jobs, I do the work myself). Then I touch up any interior damage myself. Last year I had a leak in my living room ceiling, which I originally though was from an improperly tilted air conditioner dripping into the wall from the room above. Fixed that, but then the leak got bigger, and it was clearly linked to rain. By this time there was a stain on the plaster ceiling. I got up on a ladder, found the problem with the flashing on a little roof outcrop over the living room window, fixed it, waited for the plaster ceiling to dry out, sanded, primed, and repainted. A lot of people would call their insurance company and demand they pay for a professional to come in and replaster half the ceiling (can't just paint over it, ya know, 'cause there might be MOLD!).
And NOW you'll find a way to make sure your pipes don't burst again.
Sorry, but the insurance companies are using the only means they have to get people to understand that having an insurance policy doesn't absolve policyholders from responsibility for diligently taking care of their home.
You will have to get it again, if you have a mortgage on your house (or else you'll lose the house). And honestly, I don't think most insurance companies cancel policies for a major claim that was clearly beyond the homeowner's control (e.g. your house gets hits by lightning and catches fire). But why should they renew a policy (especially at the same or a similar price), when damage was caused by a fire from overloaded electrical circuits, or by pipes that froze and burst because the homeowner didn't take the necessary steps to prevent this?
Your story reminds me of what happened to my parents. A fire broke out in their house (Cause was never determined, but it was believed to be from the wiring). Their bedroom was destroyed and the rest of the house recieved massives amounts of smoke damage. Insurance company promptly canceled and now they are only able to get homeowners insurance at around $3500 year (they were paying around $800).
As for the pipe, it was concealed inside a wall. When we opened up the wall we had all of that plumbing professionally replaced with new, which leaked within a year but you can be sure that we didn't file another claim! The plumber replaced old metal pipes with pvc using a rubber joint that was screwed on, and the screw came loose.
As an insurance agent I have a tendency to see the company's point of view on things, but my company was way out of line for their inflexibility in mandating that we replace the roof during rainy season. Leaks happen even when plumbing is new, and you call it irresponsibility. Very strange.
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