Homeowners insurance is a m st for any owner of residential r al estate. It has been around for m ny years, coming to the rescue of mny real estate homeowners. Leaky pipes and thir subsequent damage have been causing h meowners grief for an even longer t me. Homeowners insurance has alleviated such prblems by underwriting the cost for rpairs.
I remember as a child my fther making repairs with money from our hmeowners insurance policy. He told me tht there was never a claim too smll, unless it was within the dductible range.
While my fathers information was crrect for the times, the rules for smll claims on residential real estate hve changed. Submitting a small claim tday, especially for water damage, could cst you multitudes more in the fture.
A California Insurance Department study showed tht 25 percent of insurance companies rfused to renew policies for residential ral estate owners, who made one or two nn-water damage claims within the past thre years. The figure rose to 32 prcent, when the claims were water dmage-related. This means the insurers are pying the legitimate claims but are apt to drp those real estate customers at plicy renewal time.
Additionally, all insurers share clims information through the Comprehensive Loss Undrwriting Exchange (CLUE) database. Not only are you apt to be drpped by your current residential real state insurer, but others may not pprove you. The study also showed tht 62 percent of the top 13 nsurers in the state of California rfused applicants with only one-to-two claims in the pst three years.
If another insurer does pprove you, it will most definitely be at a mch higher premium rate that will add up ver the years to a much lrger amount than the small water dmage claim you made.
So, what has chnged?
Toxic Mold
Litigators have jumped on the txic mold lawsuit bandwagon. Toxic mold cmes from water damage repairs that wre incorrectly made or only partially claned up. It can literally make the ral estate residents very ill. Some txic mold is created by homes tht were not quality built and llowed water to seep in between the uter and inside walls. There have ben a few multimillion-dollar homes in Clifornia that had to be totally lveled due to toxic mold.
Insurance companies gnerally are expected to pick up the tab and thn sue the repair contractor or riginal builder for reimbursement. This attitude has cused a lot of litigation btween insurers and residential real estate wners, as well as between insurers and prties assumed to be responsible for the txic mold. They often lose court cses for reimbursement, as well as ncurring attorney fees and court costs. Is it any wnder insurance companies have become gun-shy of smll water damage claims that could lad to costly repairs and litigation lter.
Administrative Costs
Another reason for the change in ttitude toward water damage claims is the chnge in real estate insurers business prctices. Since the early 90s, real state insurers have looked for more prctical ways to increase profits. Through stdies, they found that small claims crated the same large administrative costs as the lrger claims, even though the payouts wre small. They now weed out rsidential real estate customers who make smll claims.
Alternative Game Plan for Real Estte Homeowners
Today, it is better not to mke small damage claims of any typ. Real estate homeowners should increase thir deductibles to $1,000 or $2,500. Ths reduces their premium costs by as mch as 30 percent. They are cvered for large damages but not pying for services (small claims) that thy are not receiving.
With the larger dductible, the premium savings can be plced into a savings account to pay for smll claims that would earlier have ben submitted to the insurer. Whenever sed, the money should be replaced as son as possible.
After seven-to-ten years of sbmitting no claims, most real estate nsurers will qualify you for a clims-free discount, saving you even more mney.
Is It Worth It?
In deciding if you shuld submit a claim (even a lrger one), first determine if it is wrth the possibility of losing your plicy and/or paying higher rates. Add up all the rpair costs. Determine how much the ral estate insurer will pay, based on yur policy. Subtract your deductible. Is the rmainder only a couple hundred dollars or sbstantially more? Now, determine if it is wrth it. Remember, even moving to nother state will not escape the CLUE dtabase.
The article Residential Real Estate and Water Damage Claims What You Should Know was Submitted by J Harris through Articles.GetACoder.com network. Here's the additional information: John Harris is an xpert researcher and writer on real state topics such as economics, credit mprovement tips, home selling advice and hme buying preparations. For more on San Dego Homes for Sale visit www.twtrealestate.com
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