A storm causes a water leak in your roof. The damage is extensive, so you call your insurance company. But you are reluctant to make a claim on your homeowners insurance because you're afraid the company may raise your rates. So you pay for the repairs out of your own pocket. It's a big chunk of change, but in the long run, you figure, it will be worth it.
When it comes time to review your policy,the insurance company has a nasty surprise for you. They are not raising your rates, they are dropping you altogether. Even though you never made a claim, the insurance company documented your phone call and treated it as a claim. Now you have to search around for a new insurance company. But, for some reason, no one wants your business. The only way to insure your home now is through the government-run insurer of last resort, which will cost you more than you were paying. And all of this after making just a phone call.
This was the situation Marie Wagstaff found herself in after she paid for her California home repairs in 2000. Marie got lucky -- she finally persuaded another company to take her business after showing proof of the repairs.
Many people are reluctant to make small claims on their home insurance for fear their insurance company will raise their premiums or refuse to renew their policy. Some might think the small repairs everyone has to make are exactly what insurance is supposed to be for, but in this day and age insurance companies operate under a "you use it, you lose it" policy. But few know that even calling the insurance company can land you in financial dire straits.
Just by making that phone call you have already determined that your insurance company may drop you at the first opportunity. Insurance companies treat the call just as they would a claim -- as a black mark on your record. The call may go to CLUE (Comprehensive Loss Underwriting Exchange) report on your house -- the report that realtors and banks and anyone with a financial interest in your property can check to see the claims history. Even if you call your agent and not the insurance company directly, you are likely to face the same fate.
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