What claims adjustors look for when assessing insurance liability

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Insurance claims adjustment is a process of determining how much compensation a policy holder is entitled to via contractual terms. A publication from the University of Northern Iowa describes the claims function as existing to “fulfill the insurer's promises to its policyholders...” and in “establishing an insurer's relationship to its policyholders.” Legally and on paper, the insurance claim process is designed and supposed to be fair, in practice this is not necessarily always the case. Nevertheless, the following things claims adjustors look for should help in arriving at an equitable solution.  

Background

The U.S. Department of Labor states claims adjustors include claimant background information when an examining the viability of a claim. This helps confirm identity and determine the possibility of fraudulent intent. For example, adjustors have access to criminal history if any, and previously filed claims. Convictions and patterns in previous claims are indicators of how the claimant might be approaching the claim being examined. 

Testimony

Testimonies, witness statements and recorded event details are also sought by claims adjustors because they help corroborate the factuality of the claim, and any embellishments of truth that influence the outcome of the claim. Furthermore, according to A.M. Best, interviews are accepted practice for acquiring testimonial statements. When inconsistencies between recollection of events occurs it is the claim adjustors responsibility to find the most likely occurrence. Physical evidence, police reports and other official documentation also assist in verifying claims. 

Cost

Cost is an important factor in the claims adjustment process. Since cost affects the price of both insurance policies and profitability of the insurer, unreasonable claims in particular are closely reviewed. To illustrate, in the State of Rhode Island, claims adjusters may lawfully seek the opinion of a damage appraiser in order to justify their evaluation. However, according to Donna Freedman of MSN Money, claims adjusters are also known for using manipulative statements to seek out early settlement and lower their costs.

Regulation

Numerous state and federal regulations exist that claims examiners must abide by. If the cost to the insurance company is considered worthwhile, adjustors may or may not be encouraged to objectively undervalue a claim at the expense of the state or legal system. For instance, in California, the Office of Risk and Insurance Management or ORIM adjudicates disputed claims adjustment for the purpose of obtaining settlement out of court. This settlement process follows different rules than the claims adjustment process, however state expenses such as these are avoided via effective regulation that protect both the state coffers and consumers. 

Despite regulations that protect consumers, the claims adjustment process is still a for-profit venture. This means ensuring complete customer indemnification, satisfaction and compensation is quite possibly not a priority over insurer objectives. Gray areas of actual damage costs, interpretation of legal terminology, and misuse of a system that is better known to insurers than the insured is realistic to expect at some level. For this reason, there is an important element of consumer awareness that should help the insured better handle their insurance claims and potentially yield a more accurately approved insurance claim.

Guest post: Are people with diabetes eligible for life insurance?

By: Ben Hargrove

A diagnosis of diabetes does not necessarily preclude you from being able to get life insurance, as long as it is type 2 diabetes and you are working to keep it under control.

Type 1 vs. type 2 diabetes

If you have type 1 diabetes, it will be much harder to get life insurance. Someone with type 1 diabetes is unable to produce insulin, which means they typically will need to inject or pump insulin. Type 1 diabetes typically begins in childhood, which means patients generally have it for much longer. The longer you have diabetes, the greater the possibility of more serious health consequences. 

If you have type 2 diabetes, you may have a better chance of getting life insurance than if you have type 1. Someone with type 2 diabetes has high levels of blood glucose resulting from insulin resistance.  There are a variety of potential treatments, including medication, insulin therapy, diet and exercise. Type 2 diabetes was once called adult-onset diabetes because people typically got the disease as adults, but these days, younger people are also being diagnosed with the disease.

How long you have had diabetes is important

When you were diagnosed with type 2 diabetes can play an important role in whether you get life insurance and, if so, at what rate. Insurers typically want to see that you have brought your type 2 diabetes under control. Some insurers may want to see that they have been under control for six months.  They may test your blood sugar levels with a hemoglobin AIC test.

If you were just diagnosed with type 2 diabetes, you will probably want to wait before applying for life insurance because you will want to be able to demonstrate that you have had the disease under control for six months or whatever length of time the insurer may require. However, waiting too long after you have been diagnosed may not be a good idea, since you could then run the risk of insurers’ concern that you have had it long enough to run a greater risk of health complications.

If you have already had health complications such as insulin shock, neuropathy or vision problems resulting from diabetes, it could negatively affect your ability to get life insurance.

Improve your chances by making healthy choices

Diet, exercise and regular doctor visits, factors that are helpful in getting life insurance for anyone, may be particularly helpful for people with type 2 diabetes.  Since obesity and inactivity are important risk factors for diabetes, maintaining a healthy weight, exercising regularly and having regular follow-up doctor visits can help demonstrate to the insurer that you are actively working to control your diabetes.

Ben Hargrove writes for a variety of life insurance and financial planning blogs, including Best Life Insurance Deals.

Guest Post: The Pros and Cons of Credit Insurance

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By: Susan Wells

For those of us who are less informed on financial matters, the phrase "credit insurance" sounds like a mash of financial buzzwords with questionable meaning. But, as consumers today are striving to become more and more informed on matters of money and finances, it is important to understand what credit insurance is and what its uses are. The next time you apply for a mortgage or a personal loan, the lender may ask you if you want to buy credit insurance (in some cases even, credit insurance is included in the loan proposal). Credit insurance protects the loan on the chance that you are unable to make your payments. This insurance is optional, but can be beneficial in certain situations.

The Types
There are four different varieties of credit insurance. These include credit life insurance, credit disability insurance (or accident and health insurance), involuntary unemployment insurance (or involuntary loss of income), and credit property insurance. Credit life insurance pays off all or some of your loan in the circumstance that you die before it is paid off. Credit disability insurance makes payments on the loan if you become severely ill or insured and cannot work. Involuntary unemployment insurance makes loan payments if you lose your job due to something that is no fault of your own. Credit property insurance protect personal propertied used to secure the loan if it is destroyed by events outside of your control (theft, accident, natural disaster).

The Pros of Credit Insurance
There are several pros to having credit insurance like the types mentioned above. In the case of an emergency these lines of insurance can be extremely helpful. The purpose of credit insurance is to help protect both you and lenders in unfortunate circumstances. With credit insurance, you will not be expected to pay loan amounts that you are unable to pay due to specified situations that may occur in life. Likewise, these lines of insurance help protect lenders from not receiving loan payments. A good credit insurance policy can help you avoid issues of bad debt and credit score damage.

The Cons of Credit Insurance
As with any insurance, with credit insurance consumers have to pay a premium. Insurance bodies are giving you there services in case of unprecedented complications and expect some payment for that. Premiums can cost a lot and should be something you look into carefully when examining whether credit insurance is right for you. Is paying a premium for insurance on credit better for your situation than just using that money to pay the loan back? This is something you'll have to decide after exploring your options and understanding your own financial situation.

Susan is a freelance blogger who enjoys writing about automotive and health news, technology, lifestyle and personal finance. She often researches and writes about automobile, property and health insurance, helping consumers find free insurance quotes and the best protection available. Susan welcomes comments.

Divorce and insurance changes

Divorce is generally not considered a pleasant thing by many people, but just in death and estate planning, insurance changes relating to divorce may be something divorcees would consider in their settlements or post-divorce lives. Although in some cases it may be impossible and emotionally not worthwhile to be financially pragmatic, though it could be of benefit to both parties to give some thought to insurance related concerns.

Depending on the type of policy, changes incurred from divorce may be drastic or minimal. Issues such as divorce settlement terms, judicial decree, federal regulations, family and individual needs can all affect coverage after the divorce. For individuals who are soon to be, or recently divorced there may be several issues to consider before proceeding with changes to insurance policies. This article will first outline some of those concerns and then discuss how and what changes may occur.

Some of the matters that divorcees might want to consider in terms of their insurance coverage are the following factors.

• Spouse's employer provided insurance, if any and regulations pertaining to that.
• How soon do you want to separate all financial aspects of the relationship.
• What will be increases in rates due to reductions in a multi-car and/or multi line policy.
• If existing policies can be simply adjusted do you want to use the same agent as your ex.
• The benefits of retaining existing policies can be cost effective.
• Identification of insurance priorities such as children, auto, health etc.

Once a decision is made either by court decree or mutual consent via annulment of marriage, the process of changing insurance policies can begin. Depending on what the court decides it could mean anything from surrendering life insurance policies to allowing mutual collaboration. In other words, the decision to change insurance shouldn't really be made until the divorce is final.

Different insurance policies have different regulations and requirements associated with divorce decrees and settlements. Life insurance settlements can be more complicated than automobile insurance due to the fact beneficiaries, and retirement income may be involved in addition to changes that may not fall within the original contract terms. Speaking with a life insurance agent, reading the contract and researching regulatory laws can assist one in knowing what one has a right to thereby empowering both parties in the divorce to keep as many benefits and advantages of the original policy as possible.

In cases involving the dissolution of previous policies, one is charged with the task of finding new insurance and/or re-establishing contracts with previous insurance companies. The companies that offer the most flexible terms of service and agreement may be the best choice as such terms may include continuation of pre-existing terms as an individual despite the divorce.

II: Tips on Keeping the most Insurance Benefits after a Divorce

The following tips are intended for higher financial benefits and not necessarily emotional peace of mind but may be worth considering nonetheless:

 

• Maintenance of existing coverage

Change allows insurance companies to insert new caveats, reset interest rate terms, fee schedules etc. Keeping old policies alive avoids such changes.

• Consider Children's Needs

Dissolving life insurance policies can mean less potential coverage for children in the event of illness or death of one or more of the parents. If children are a priority, consider the effects of the divorce settlement on their needs.

• Reassess Insurance Requirements

After divorce insurance needs may change, increasing deductibles, shedding insurance on things like your ex-spouse's gold watch collection may be wise. If the benefits outweigh the costs, trimming insurance coverage might be a good idea.

• Collaborate for Financial Gain

Sometimes divorce involves complete emotional, psychological, physical and financial annulment of a relationship. If however, that is not the case, there may be advantages to keeping old policies intact for as long as legally possible. Those benefits can include family discounts, non-adjusted premiums, higher coverage values and less paperwork.

• Review applicable law

Depending on what type of coverage one had during the marriage, Federal laws may allow continuation of various policies such as Health insurance regardless of severance of relationship i.e. in the case of spousal coverage via an employer, coverage can continue unchanged up to 3 years in some cases. However, this may not suit or be applicable for every divorced couple. Insurance agents, divorce lawyers and insurance managers may be able to assist with the legal regulations. Nevertheless, it doesn't hurt to double check to make sure they're giving you the best deal.

In summary, divorce is likely to have some impact on insurance of one kind or another. Insurance that existed before the marriage may stay intact and untouchable as previously held property, however insurance such as life insurance acquired during the marriage are subject to settlement terms. There may be some flexibility concerning health insurance continuation, but the bottom line is keeping as much coverage with few if any disadvantageous changes to coverage, terms or cost.

Inflation protection in long-term care insurance policies

The rising costs of health care coverage exceed average earnings increases and inflation costs for U.S. households by approximately 4 times. To illustrate, health care inflation since 2002 has averaged approximately 11.42% per year in comparison to the estimated average U.S. inflation rate of 2.78% since 2000.

Due to the rising cost of health care, long-term care insurance coverage is subject to inflation risk, and $100,000.00 of coverage at the start of a long-term care insurance policy may greatly decline in purchasing power within 10 years as the cost of health care rises. For these reasons, being protected for inflation in a long-term care insurance policy is a legitimate concern.

Inflation protection methods in long-term care insurance

Insurance care providers, employers and insurance policy holders hedge for inflation in a number of ways. Insurance providers are well aware of the rising cost of health related services and take steps to accommodate these price increases into their budget models.

Unfortunately this can lead to the passing on of costs in the form of premium inflation. However, in some cases the insurance premium may increase at a lower rate than the inflation adjustments in which case the policy may be worth considering. Some of the ways inflation is dealt with by the aforementioned parties are the following.

• Premium increases
• Annual inflation adjustments in coverage
• Policy provisions allowing for coverage increases
• Increases in deductibles
• Cost shifting by employers
• Reductions in coverage timeline
• Insurance related Tax adjustments
• Multiple insurance discounts

It is widely known that purchasing a long-term care insurance coverage policy at an early age greatly reduces the premium costs of the insurance and in some cases provides greater policy flexibility in terms of coverage amounts, deductibles, length of coverage etc. If these benefits outweigh the costs of purchasing a policy at a later age and the policy includes automatic adjustments for inflation, it may be worth considering especially if one has a negative prognosis or expectation as pertaining to health future health care coverage needs.

Aspects of long-term care insurance

Choosing a long-term care insurance policy that protects against inflation but not necessarily at the expense of an increased cost of living can be difficult. However, reducing the gap between health care inflation and core inflation may be achieved by considering different health care coverage options and being aware of the various possibilities of coverage and coverage needs.

Long-term care coverage includes some of the most expensive of health care services including but not limited to nursing home assistance, hospice care, and long-term inpatient hospital services. A few practical factors someone considering this type of insurance may consider are the following:

• Age and health prognosis
• Likelihood of long-term care needs
• Awareness of long-term care options
• Availability of family care and/or private in home assistance
• Amount and length of coverage protection
• Alternative insurance options
• Lifestyle related activities and expectations

These factors can influence the cost of and potential need for long-term care insurance coverage and could assist one in making a wise and/or reasonable decision regarding the assumption of a long-term care policy.

The more unfavorable the factors are in terms of health care needs, the greater the likelihood long term care coverage may be needed. Additionally, differences in the policies, premiums and coverage of different long-term care insurance providers may vary enough to make shopping around for long-term care insurance worthwhile.

Selecting inflation adjusted long-term care insurance

Once the decision to purchase a long-term care insurance policy is made, several options exist depending on one's employment status, age, coverage requirements etc.

Online quote services can be of assistance in getting a general awareness of prices in terms of age and coverage and/or one's employer may have a long-term coverage plan. It is important to note however, that COBRA i.e. the Consolidated Budget Reconciliation Act may only allow continuation of a policy for upto 18 months after cessation of employment after which a new policy with a potentially higher premium may be required.

Additionally, one's health prognosis may worsen or improve over time and federal policies pertaining to long term coverage could also adjust. Such being the possibilities, what is a good policy one day, may not be another day, making the potential for these changes another factor to consider in the policy acquisition decision. Providers of such are listed below:

• American Association of retired persons (AARP)
• Federal long term care insurance program (FLTCIP)
• Auto insurance providers ex: State farm, American family insurance
• Life insurance companies: ex. New York Life, Prudential
• Health insurance providers: Kaiser Permanente, Humana

Summary

Inflation's affect on long term health care costs can and has been higher than average annual inflation and earnings increases. This has led to concerns about inflation protection in long-term care health insurance.

Several mechanisms are in place and may be implemented in the future to deal with this financial obstacle. Becoming aware of the possibilities, choices and circumstances surrounding long term care health insurance can be useful in making better insurance decisions, hedging for inflation and being prepared for health care needs in the future.

This article has discussed and outlined some of those possibilities. The choice to continue with or purchase a long-term care health insurance policy may be a supplemental or primary need and can also be factored into one's overall financial plan. Consequently, the long-term care health insurance policy decision is a dynamic one touching on many financial and health related factors.

Sources:

1. http://www.inflationdata.com/inflation/Inflation_Rate/CurrentInflation.asp
2. http://tinyurl.com/4w53qvj
3. http://tinyurl.com/2ukw6q
4. http://tinyurl.com/ht5oh
5. http://www.opm.gov/insure/ltc/
6. http://www.pueblo.gsa.gov/cic_text/health/ltc/guide.htm
7. http://www.irs.gov/taxtopics/tc502.html
8. http://www.opm.gov/insure/ltc/topten/release.htm

How to Spot Abusive Insurance Policies

Abusive insurance policies may be illegal, misleading, unreasonably expensive and otherwise dubious in terms of standards within the insurance industry as a whole. This article will illustrate the ways which insurance companies can be abusive, where to look to uncover abusive and/or potentially abusive insurance companies and practices, in addition to providing tips on how to avoid insurance abuse.

Ways insurance companies may be abusive

Insurance abuse may be subtle or just seem like abuse when it actually isn't. Defining insurance abuse is left largely to Federal and State regulators, as well as litigation outcomes via individual, government or class action suits.

When court rulings and pertinent legislation is adjusted, information becomes available to the public so they may be informed of cases in which insurance companies have been and may be abusive. A few of ways insurance companies can be proven to be abusive are as follows:

• Breach of state and/or federal legislation regarding the claims process
• Disinformation regarding insurance policy details
• Questionable advertising
• Price gauging through excessive insurance premiums
• Failure to carry out contract provisions

Where to look for abusive insurance policies

Sometimes it can take a little digging to uncover abusive insurance policies. After all, what insurance company is going to advertise the fact it is being abusive? In one's investigation it may be helpful to look for warning signs and/or pre-cursors to actual insurance abuse in addition to public alerts on proven cases of insurance abuse. A few of the ways to become informed regarding insurance abuse are to be aware of the following:

• Class action suits against insurance companies
• Governmental hearings and/or investigations on abusive insurance
• Federal and State Insurance Regulators
• Consumer rights organizations

Tips on avoiding insurance abuse

Holders of insurance policies don't have to be victims of insurance abuse. If one is involved with an abusive policy one can consider switching to a different company. Otherwise and before doing so it may also be advisable to consider the following initiatives:

• Compare insurance policies
• Research insurer statistics such as payout percentages, and claims ratios
• Investigate consumer alerts, litigation or government actions against insurers
• Question the insurance provider when in doubt

In summary, insurance abuse is something that happens but may have to proven as such through a legal process, or investigation. There is significant legislation governing the practices of insurance companies regarding insurance claims, pricing, and advertising all of which may be considered standards and/or benchmarks to assess an insurance policy and the carrying out of insurance contract provisions.

Through being informed of ways insurance companies can be abusive, where to look for abusive insurance policies and taking steps to avoid insurance abuse, policy holders can be better equipped to handle and identify insurance abuse when it happens.

Guide to Accident Insurance for Individuals

Accident insurance can include anything from pet accidents to transportation costs on body parts in the event of an accident while flying. While some of the risks associated with accident insurance are minimal, in other cases the risk may be greater.

Assessing the risk of accident in one's life, activities or work is an important step in deciding if and which type of accident insurance is necessary. This article will illustrate the types of accident insurance available and then discuss when it might be a good time to purchase a specific type of accident insurance.

Types of Accident Insurance:

There are many types of accidental insurance available. Each type covers a specific activity or event. Since different individuals may be exposed to different risks, not every type of accident insurance may be necessary. For example, a hang glider may consider sports accident insurance while a professional chess player may not. A few of the different types of accident insurance available are as follows:

• Sports and Recreation accident insurance
• Travel insurance
• Flight accidental insurance
• Personal accident insurance
• Occupational accident insurance
• Pet accident Insurance

When to Buy Accident Insurance:

Accident insurance can be purchased for limited time periods when one is more at risk of certain accidents or when traditional insurance policies don't cover specific activities. For example, if one is employed in a job that involves a specific type of risk such as drowning, accident insurance may be available through the employer or private company to cover accidents associated with that job. Knowing what one's risks are, and how long one will be exposed to those risks is an important factor in the decision to purchase accident insurance.

Accidental Insurance Costs:

The cost of accident insurance is generally quite low unless the risk which the insurance covers is very high. Typical premiums for many types of accident insurance range from a few dollars per month to the tens of dollars per month. In some cases deductibles are applied upon redemption of accident insurance claims, but these deductibles may only be a small fraction of the maximum coverage amount.

Some companies may include some types of accident coverage within other insurance plans or the insurance may be a standard feature in a purchase such as a car rental. In such cases, reading one's existing insurance policies to determine what one is covered for already may save money when traveling or considering accident insurance one may not otherwise need.

Where to Find Accident Insurance:

Accident insurance may be available through one's existing insurance provider, employers, private health insurance companies or private companies that deal with more unique types of accident insurance.

Contacting well known and credible insurance providers may be a good way to obtain additional quotes and information, however researching other companies via telephone inquiry and Internet research may also prove beneficial. For additional questions about misleading advertising, understanding insurance contracts, recent legal developments etc., one might consider contact insurance regulators and watchdogs such as the following:

• National Association of Insurance Commissioners
• State Insurance regulators
• Federal Trade Commission
• Departments of Consumer affairs at the State level

In summary, accident insurance is a specific type of insurance that individuals may pursue to protect themselves and/or their loved ones in the event of accidents causing damage to property or self in certain circumstances.

The types of circumstances and events in which certain accidents may occur are many, and there are also several types of accident insurance tailored for such accidents. Some companies may offer a wide range of accident coverage within a single policy whereas other may not. This article has presented which types of insurance may be useful, when accident insurance might be worth considering and how to go about obtaining ancient insurance.

Why condo insurance is used

Condo insurance protects condominium owners from property damage, destruction or theft. Without condo insurance, condo owners are subject to greater financial risk if damaged property costing more than insurance deductibles and annual premiums is incurred in a given year.

Additionally, condo insurance can cover expenses associated with natural hazards such as damaging weather, third party liability within the condo and problems associated with both structural and internal construction of the condo. Two types of condo insurance are typically required for more comprehensive insurance coverage and include condo association master policies, and individual condo insurance.

Condo insurance coverage limitations

As comprehensive as a condo insurance policy may be, condo insurance does not cover all events and circumstances. For example, owner negligence of property that leads to damage is not necessarily covered by condo insurance. In other words, personal vandalism of property may be considered to be within the condo owners control to prevent, and are therefore not covered by the condo insurance.

The extent of individual condo insurance coverage depends on what the condo owns, has listed with in the insurance policy and the effectiveness of carrying out the claim procedure. Another item condo insurance may not cover is the full cost of damage as the insurance's method of property valuation may be different from that of retail cost.

Condo insurance disputes may occur between condominium owners and property management companies that request and oversee condominium association fees. In some cases the condominium property manager will pay maintenance costs from its own fund for the purpose of property upkeep and maintenance including landscaping, external painting and snow removal.

In cases which individual condominium owners are required to meet building insurance and safety codes, liability and responsibility may be questioned. For example, if a dryer vent begins in the condominium and ends on the roof of the condominium, who is responsible for the cleaning costs of the vent if the external vent protection must be removed for internal cleaning? Some might consider this part of the condominium owners responsibility but an argument might be made that the external labor is in fact a responsibility of the condominium property management.

Percentage of condo owners with insurance

Depending on where one lives, some form of condo insurance may be mandatory by law and/or by the policy set forth by condominium organizations. More condominium owners have condo association master policies than both individual and master policies as the former is more often an owner's choice than the latter. Nevertheless, according to information gathered by the insurance information institute, 96% of homeowners had some kind of home insurance in 2006, but 66% of homes were under insured in 2007. This reflects the importance of having both a condo association master policy and individual property insurance.

Condo association master policies vs individual property insurance

Two types of condo insurance are available to condominium owners. These insurance policies include 1) Condo association master policies and 2) Individual condo insurance. The two types of policies differ in one key area, specifically, condo association master policies protect against external damage and in some cases limited internal damage such as basic furnishings and/or equipment, whereas individual condo insurance protects against internal damage and property theft. Without an individual condo insurance policy, electrical problems, fire damage, non-preventable vandalism to property within the condo and plumbing accidents are not covered.

Another difference between the two policies is the cause of property damage. If internal damage is caused by an external source such as a tornado, a claim can be made using the condo association master policy since the problem was derived externally. The reverse is true for individual policies where if external damage is caused by an internal cause such as fire, then the individual policy can be used to make a claim

In summary, supplementing master condo insurance with individual condo insurance is a good idea to maintain at least a basic insurance for liability, some property protection and building structure. The more comprehensive the coverage, the greater the protection to personal property can be. If multiple policies are held with the same company, and higher deductibles are utilized, the insurance premium may not be as high as if the case is otherwise. The risk of not being insured, and having an event where condo insurance would have been useful, could end up costing more than being insured, and making a claim against that insurance.

Source: http://www.iii.org/media/facts/statsbyissue/homeowners/

When filing a claim on homeowners insurance raises your rates

Insurance companies raise rates on homeowners insurance policies when aggregate claims rise in a region, when claims history for a particular insurance holder is a factor, when new court rulings cause previously contested claims to be paid out and in the event of claims due to property age and condition related factors. The following sections of this article illustrate why homeowners insurance companies enact rate increases for these reasons.

• Aggregate Claims can Raise Rates

Insurance companies raise insurance rates if the aggregate risk or payout in claims for a given year has risen. In other words, if a tragedy or event such as sinkholes or hurricanes hits a region with particular force in a given year, the costs for the insurance company rise and rates go up. What's more, such costs don't just affect the insurance holders making the claim, it can affect all the insurance holders in the area in the form of a rate increase.

• Claims History Factors into New Policy Rates

Other reasons a homeowner's insurance policy premium may rise could be due to a claim history on previous homeowners insurance policies. For example, if person A makes a claim in 2007 on a damaged roof from a lightning strike his or her insurance company may not raise rates. However, when person A moves into a new home in a different state, the new insurance policy may take into account previous claims as a factor in assessing the rate on the new home using probability modeling or cost algorithms.

• Court Ordered Claims create Precedence

The results of insurance pay outs ordered by court decision can cause rates to rise. This can happen because the outcome of the court ruling can create precedence for future claims decisions and court cases. In effect, such court rulings can create new forms of coverage that were previously thought not-covered by the insurance policy and company. The result to such claims supported by the court can lead to rate increases.

• Claims related to Age and Condition of the Home

Another type of claim that could cause insurance companies to raise rates is a claim resulting from age related property damage that could cause future claims to be made. For example, if a property has 35 year shingles that have reached the end of their life and the homeowners does nothing to replace them this could lead to an related insurance claim. Furthermore, if the homeowner continues to do nothing about the shingles and just repairs the damage with claim the insurance company may raise rates in anticipation of higher risk and probability of future claims.

In many cases a homeowners insurance company will not raise rates due to a claim. However, as this articles has discussed, there are several unique circumstances and claims related events that can cause insurance rates to rise. Typically those reasons are an increase in total claims payouts for a region, policy-holders claim history, court rulings and claims related to changing property conditions over time and due to lack of maintenance. Lastly, despite the possibility an insurance company may not raise rates due to a claim, they may have clauses and rights within their contracts to raise rates or cancel policies if they reassess a property as being too high a risk following an insurance claim.

Sources:

1. http://bit.ly/cLY1rB (Wisconsin Insurance Commissioner)
2. http://bit.ly/a7bZdy (CBS Business Network)
3. http://bit.ly/94mYyH (University of Illinois-Urbana-Champaign)