5 On Your Side: Homeowner's insurance dropped

10:46 PM, Aug 2, 2012   |    comments
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St. Louis (KSDK) - It's a common complaint to 5 On Your Side: homeowners who file a claim or two on their insurance policy, only to have their coverage dropped.

That's what happened to one north St. Louis County homeowner. He's not happy about it and he wants to know why.

5 On Your Side's Mike Rush gets some answers every homeowner will want to hear.

Darrell Alexander moved into his dream house a few years ago, but over the past couple of years Mother Nature caused few problems.

"When I made my first claim, they came and I made that in 3-23-11, cause we had a terrible storm and they seemed to take care of it," said Alexander.

That storm took out part of Alexander's fence, and damaged his roof.

"February one I made another claim, when we had that bad hail storm," said Alexander.

This time the damage was more extensive.

"I needed a whole new roof and the roof came out to about $13,000," said Alexander.

Travelers Insurance approved a new roof, sent Alexander a check and he hired a roofer. A couple of weeks later and before this new roof was ever put on, he got a letter from Travelers saying they were dropping him.

"And that really p-o'd me to the point that I called 5 On Your Side because I felt that this kind of thing that these large companies and corporations are doing, they're making all the money, they got the money, why are they messing with little me," said Alexander.

Alexander wanted some answers and so did 5 On Your Side. We took our questions to Jefferson City and Matt Barton, the Director of Consumer Affairs at the Missouri Department of Insurance. It is the state's sole regulator for the insurance industry.

"Some companies certainly do use claims history and in that process they decide if they want to renew a policy or non-renew a policy," said Barton.

Barton says insurance companies are not breaking any laws by using claims histories this way. He says even if you notify your insurance company say in the case where someone hits your car and their insurance is paying, that can be used against you.

"That zero dollar claim can be reported on your policy and to this repository other companies can use this information to decide whether to renew or not renew a policy," said Barton.

So what recourse does a consumer have? Barton suggests calling different companies, agents and brokers for quotes, get referrals from friends, look for discounts by bundle your policies, and before filing a claim, call the department of insurance. Consumers could learn that filing that claim might not be your best course of action.

"If that claim or that damage amount is close to the deductible possibly or more than the deductible the consumer may want to weigh going ahead and paying for that damage out of pocket to repair," said Barton. "In the long run it could be cheaper especially if the consumer factors in that they could be facing higher premiums in the future possibly even a non-renewal."

Alexander needed a roof and didn't have a choice.

"It's a big game, because the mortgage company says you can't have a home without insurance so they play the game, the insurance plays the game, they drop you, the other insurance who pick you up makes you pay twice as much," said Alexander. "I'm very disappointed with Travelers and I tell people all the time if you have it, you need to start looking for something else."

Alexander was told if he files a hail claim on his new homeowners policy, he have to pay an extra thousand dollar deductible.

5 On Your Side's repeated calls to Travelers Insurance were not returned.

Matt Barton is the Director of the Division of Consumer Affairs for the Missouri Department of Insurance, Financial Institutions and Professional Registration. Barton answers questions about how insurance companies decide which policy holders they will no longer continue to cover.


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