Our daughter Jaime called to tell us, through angry tears, that she learned from her mortgage company that her homeowner’s insurance policy had been cancelled.
Evidently, when the mortgage holder tried to make a payment from Jaime’s escrow account, the insurance company couldn’t accept it because Jaime was no longer insured. After cooling down and gaining her composure, she contacted her insurance company who affirmed the cancellation. The reason? She had filed three claims over a nine-year period.
“Why,” she asked, “didn’t anyone caution me that I was about to be dropped? And, pray tell, why didn’t you tell me when you dropped me?”
“We sent you a cancellation letter before the policy was dropped. It was returned to us as ‘non-deliverable,’” the agent stated coolly. “That is all we are required to do. If you didn’t get it, it is not our fault.” (Note from Joe: This makes no sense because Jaime still lives in the same “insured” house she had been paying premiums on all those years.)
With her mortgage holder breathing down her neck, Jaime contacted several insurance firms before finding one who agreed to a policy which cost twice as much as her previous one. She feels betrayed by her former company and unwilling to trust her new one.
So, what can we learn from this nightmare? Should you even file an insurance claim?
“Of course!” is the logical answer. “Why should I pay for insurance if I am not going to use it?” Yes, that is good logic, but who says insurance companies are logical? The stark truth is that you may be better off paying the claim yourself.
Here are some guidelines . . . .
When to File the Insurance Claim
1. File if it’s a Big One
When the size of the claim is small enough that you can handle it out of pocket, you probably should. However, when the big ones come, go ahead and file. This is why you bought the insurance. Tricky challenge: Define what “big” is for you.
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