Home Insurance Policy Renewal While You Have an Open Claim
What happens when you have to renew your home insurance policy while you have an open claim? It’s a common issue for families who have had a fire in their home or who have been affected by a natural disaster. Most home insurance policies only last a year, and the rebuilding process frequently overlaps with your renewal date.
Many of our clients are not sure what to do after a house fire, and issues like these can be a source of stress and uncertainty. We’re going to take a look at some of the scenarios that we often see when policyholders have to renew their fire insurance coverage while they have an ongoing claim.
You Want to Change Your Provider
We often hear from families who are having issues with their carriers during a claim and want to find a new insurer. It’s usually not until you need to make a claim that you run into problems with your insurer. You’ve been paying their premiums for years, but when you finally need to make a claim, it seems like the insurance company is more interested in putting obstacles in your way than helping.
The insurance adjuster requires a lot of paperwork to prove your claim. The deadlines are not always sensitive to the time that families need to recover emotionally. If the insurer rejects parts of your claim or you’re having trouble dealing with an insurance adjuster, you can wind up feeling resentful when your insurance is up for renewal and ready to move on to a new insurance company.
Unfortunately, it can be difficult to change providers with an ongoing claim. There are usually no alternatives to sticking with your current insurer. If you’re having problems or disagreements and you insist on changing providers, your best option is to wait until your claim has concluded.
Adjusting Your Home Insurance During the Recovery Period
Depending on where you are in the recovery process, you may want to talk to your broker about amending your coverage while your home and belongings are being replaced. Total fire loss means you don’t need to insure the Structure, Contents, or Additional Living Expenses the same way that you did before.
You still need some level of insurance. There are cases when fire leads to further loss, particularly when only part of your home has been damaged. You need to insure against further damage from the elements, looting, and squatting, or else you can wind up wholly responsible for paying the damages. That said, you may be able to save some money in the short term by customizing your coverage for what you have left.
If you’re far enough along in the process, the insurer is not likely to offer a discount on premiums. For example, you have a fire in July, and your insurance renews in December. You’ve replaced all of your contents and progress is being made on your home. The difference may not be substantial enough to warrant altering your insurance policy.
However, if you go through a total loss in October and your policy renews in December, you may be able to save some money by making adjustments. It may still be months before any progress is made on your home, and it doesn’t make sense to insure a structure or belongings that aren’t there.
Keep an eye on your coverage compared to progress. If you decrease your coverage substantially on your renewal date but three months later you’ve replaced all of your contents, your coverage should reflect the change.
Why You Should Not Adjust Your Liability Coverage
You can save a bit of money short-term by amending your Structure, Contents, and Additional Living Expenses coverage, but one element that you should not change is your liability coverage. Your home insurance policy covers personal liability in the event that someone injures themselves on your property.
As reconstruction begins, the site will be busy with contractors, inspectors, engineers, and more. There’s also the risk that someone could trespass on your property and injure themselves.
Liability insurance also protects you if another fire starts during the reconstruction process. If that fire spread to a neighbour’s home, you could be pursued for the damages. Learn more about liability insurance and fire insurance claims to find out why your liability coverage is still critical.
The Insurer Drops the Homeowner’s Coverage
There are rare cases where the insurer may choose not to renew your policy if the house isn’t built by the renewal date and there is nothing to insure. It’s not common for the carrier to drop policyholders, but if it does happen, you have to be proactive about finding new home insurance. It will be more of a challenge if you have an open claim.
An insurer may decide to drop your coverage if you’ve filed too many claims in the past, if there are additional risk factors that make another loss to your property likely, or if they stop offering coverage where you live.
Will Your Rates Change After a Fire?
Unlike auto insurance, premiums on home insurance don’t tend to go up after an accident. Homeowners are not usually seen as a higher risk because of one fire or a natural disaster unless they were negligent or at fault for the loss. One bad fire does not make you uninsurable.
Premiums are on the rise as a whole across Canada, especially in western provinces, but home insurance premiums are rarely the result of individual actions. Rates are rising due to the increase in natural disasters such as wildfires. Insurers are facing more claims, and they’re charging more across the board to cover those costs. Switching carriers is unlikely to help you avoid this trend, as all insurers are facing rising costs.
In conclusion, making adjustments to your current policy with an open claim can save you a bit of money on your premiums, but changing insurance providers will prove to be a challenge until your claim is resolved. If the timing’s right, talk to your broker about making amendments and make sure you keep your full liability coverage. As frustrated as you might be with your insurance provider, renewing your policy is often the path of least resistance.