(In our last exciting segment of “Dude, Where’s My Homeowners Insurance Policy?”, we learned submitting a claim during the first 60 days after applying for homeowners (and auto) insurance is akin to bringing a vampire out in the daylight. Without the special sunshade.

Today’s installment will continue the study of claims and how they affect your ability to purchase homeowners insurance from preferred companies.)

Where’s My Homeowners Insurance Policy, Part 2

Let me start by saying in all my over 29 years in the insurance business, I’ve never seen claims come across my desk with the frequency and size the like of which I’ve seen in the last 20 years. You can blame Hurricane Irene and Tropical Storm Lee all you want. Truth is, too many people are simply not investing any real money and energy in maintaining their homes.

I blame the sin and disease of deferred maintenance.

Home Maintenance, The Economy, Deferred Home Maintenance

I believe there is a direct correlation between the state of the economy and home maintenance.

When the economy was blasting away like a furnace in a steel mill, homeowners actually spent money, copious amounts of money, on the regular maintenance of their homes. This investment, a direct reflection of the pride of homeownership, came with an accompanying benefit: Because of the amount of care and attention paid to keeping their homes in tip-top shape, there were fewer claims impacting, for example, my agency’s results. And, the claims were smaller. Less cost, less frequency.

Sounds like an old television commercial. The kind I really like.

The Years The Music Died

Then came 2006, 2007, and (why, oh why Lord?), 2008 and 2009, 2010, and 2011.

When once non-existent claims found life, and once-small claims became huge. When diamond rings began to “disappear,’ and water damage claims once averaging $3,000 to $5,000, suddenly ballooned to $10,000, $20,000 and beyond.

In one case, a clients home suffered interior water damage from a heavy rainstorm, caused by a leaky roof, caused by deferred maintenance, caused by reduced family income, further exacerbated by the family purchasing a home which was overpriced and in poor condition, inspected by an appraiser who over-appraised the property, accompanied by an equally unaffordable monthly mortgage committment.

The company I’d insured them with paid the claim. The check they received, less their deductible, should have been used to repair the defective roof, and replace water-damaged furniture, rugs and clothes . This way, when the raindrops fall in the future, no more leaky roof, no interior damage.

Your Homeowners Insurance Policy Is Not A Piggy Bank

Guess what? The next year, after a heavy rain, the same homeowner submitted yet another claim for the same cause of loss! Even the insurance company’s claims department was shocked they’d submit the same claim two years in a row.

I called the client, basically asking “What the hell? Why are you submitting the same claim two (2) years in a row? Why didn’t you repair the roof with the money you received last year?”

Their reply? “We used the money to catch up on the mortgage.”

Oy.

So, the company paid the claim, again. When policy renewal time rolled around, though, they got a different letter from the insurance company. Basically it read, “Your policy is being non-renewed for the following reason: Negative claim history.”

When you receive a letter like this from most voluntary companies, your options are few. You are done. End of story.

Now, this particular story could have had a happy ending, were I able to place them with another preferred company.

No one wanted them. Well, that’s not entirely true. One company did. At a premium of over $9,000 each year. (Don’t get all self-righteous and indignant. You want to dance to the band, you’ve got to pay the man, or in this case, the insurance company.)

So, once the bank learned their voluntary homeowners insurance policy lapsed, they graciously agreed to place a force-placed policy on the home. At a premium of $4,800 each year.

Heck, it was cheaper than the other policy I offered them.

(Our next post will address why home maintenance is important to individual homeowners and the communities they live in. Also, for the first time in the history of BrooklynCovered.com, referrals to home maintenance professionals! And please, take a minute and subscribe to BrooklynCovered.com by entering your name and email address at the top of the column on your right.)