How Do Homeowner Insurance Companies Determine Who is at Risk?

NY Home Insurance Claims

NY Home Insurance Claims

In the same way, creditors use a credit score in order to get a clear idea of how risky it is to lend money to people, insurers use scores to assess the same thing. However, when it comes to insurance scoring models, there are many factors that go into them, such as the number of claims on your record and the number of claims you’ve filed. Even though the amount of time that a claim is going to stay on a report can vary, the average is between 5 to 7 years.

1) Public Database

The majority of companies are subscribed to a public database service where consumer information is reported by insurance companies. Thanks to these databases, insurers can get a lot of info regarding the number of homeowner insurance claims an individual filed. By getting their hands on this data, insurers are able to screen those who apply for insurance and assess how risky they are. When someone files a claim, insures can easily find out the kind of loss reported when the claim was filed and the settlement amount the individual received.

2) The Fair and Accurate Credit Transactions Act

The FACT Act is basically a revision to the FCRA which determines what parties can gain access to consumer data. Thanks to it, consumers can easily request 1 free copy of their insurance file per annum. In order to learn more about whether consumers have filed previous insurance claims or not, insurers use databases managed by agencies like CLUE for instance. These databases and others make it possible for insurers to trade consumer data, such as insurance claims histories, but also those that are related to loss of property. The federal law allows citizens to dispute data on their CLUE report that they deem inaccurate.

3) CLUE Records

The personal info consumers provide to the insurers is loaded into databases such as CLUE and many others and allows them to easily investigate the applicant’s claims history to determine his risk level. Besides the applicants’ insurance claim data and home address, the report also contains extra information, including the individual’s mortgage loan number, the name of his mortgage lender and his SSN. In general, personal properly claims data stays on the report for about 5 years from the time the individual reported a loss. Depending on the database, this information may be kept longer.

4) Homeowner’s Insurance Claims History

If your home sustains specific types of damages, your insurer can cancel your policy or increase your homeowner insurance’s rates. Some of the main claims that will unmistakably make the cost of your premium to increase include falls, dog bites or those that involve water damage. That is why it’s important to be cautious when trying to submit a loss to your insurer, since if you file multiple claims, it will be a lot more difficult in the future to purchase homeowner insurance.

There are also policies that may place limits on payouts. In fact, there are certain cases when paying for damages yourself can prove a lot more affordable than filing many small claims. It’s important that you always provide accurate info on a claim form or insurance application. If you don’t, then the policy can be canceled by the company before it expires. It’s also possible that the company will not want to renew your policy after it expires, if it decides to do so, then it needs to notify you about it in advance.

Coastal Insurance Solutions specialize in homeowners insurance on Long Island and New York State.  If you would like more information about homeowners insurance, give us a call at 631-782-3175

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