Monday, September 29, 2014

An Insurance Story (That's Not Quite As Boring As I'd Like It To Be) ...

This is what I've learned: Insurance is meant to be purchased, not necessarily used.

I grew up in a State Farm home. Bob Gaspadarek was our insurance agent. I remember being at his office once. But mostly, I remember that each year as Christmas drew near, a desk calendar would arrive from Bob in the mail. I remember thinking that that was a nice thing. It folded in such as way as to sit at a slight angle, for at-a-glance viewing. I believe the lettering for his name, address, and phone number was gold.

And so, when I bought my first car, of course I insured my car with State Farm. And when I moved into my first apartment, of course I bought renters' insurance from State Farm. And when I bought my home, of course my homeowner's insurance was written with State Farm.

I had been a State Farm customer for more than 20 years. Notice the past tense there.

"Had been," because last month, State Farm dropped me.


Why? Because in recent years, I made three small claims, all related to weather and power outages related to weather. My deductible was $1,000, so I paid $3,000 toward rectifying those situations. State Farm paid, exactly, $6,488.49. In other words, I paid about one-third and State Farm paid about two-thirds. That seems like a pretty fair deal.

But this is what else I've learned: The dollar amount doesn't matter.

No, what matters is the number and frequency of the claims.


Never mind that I didn't make a claim for the first 15 years or so that I had any kind of coverage with State Farm.

Never mind that over my years as a policyholder, I paid far more into State Farm's coffers than $6,488.49.

Never mind that our climate is changing and weather-related claims are likely to increase for all of us.

Never mind that just last year, when my homeowner's policy renewed, State Farm applied a Claim Record Discount to my policy.

Nope, none of that mattered. My claim in February, for which State Farm paid out a whopping $1,175.65 (to my $1,000), is the reason that State Farm dropped my homeowner's policy.

Ideally, someone at my local office would have warned me. Ideally, someone would have said, "Beth, don't file this claim. This will cause us to drop you at renewal. Pay for the entire repair yourself."

But they didn't.

So it was up to me to find a new homeowner's policy. (Side note: I tweeted my problem and tagged @StateFarm each time. I received no response to my tweets. Ever. I also tagged @Allstate and someone replied within 20 minutes. If you're going to bother having Twitter accounts, companies, use them. They're a handy means of interacting with your current and prospective customers in real time. Nifty!)

I called a local Allstate office for auto and homeowner's quotes.

And I soon learned that Allstate would not write a homeowner's policy for me.

Because of the frequency of my claims. (With some insurers, claims stay on your "record" for five years, in case you didn't know. I didn't know. Now I do. And, if you're reading this, now you do, too. It would behoove you to ask your insurance agent about your insurance company's policy on this front and file any necessary claims accordingly.)

The dollar amount of my claims factored into Allstate's decision in no way. Two claims in five years would have been OK. Three claims in five years? No can do.

The woman I spoke with at Allstate was as helpful and informative as she could be. She shared the number of a broker who she suggested might be able to help me because, she said, I didn't want to end up with forced-placed insurance.

Force-placed insurance? Googling that phrase made my stomach turn.

Of course, it's a condition of my mortgage that I carry homeowner's insurance. But, in the event that I could not secure insurance on my own – my ability for which was in doubt – a bank would have put into force insurance to protect its investment – not me – and charge me for the coverage.

The problem is, according to my Googling, force-placed insurance, in some instances, is 10 times as expensive as typical policies.

TEN times. Banks have been sued in recent years for practices related to force-placed insurance. Thanks to the Consumer Financial Protection Bureau, those banks have reached settlements and have been ordered to refund consumers a portion of their payments, but still.

I freaked out at the notion that I might have to pay TEN times a typical monthly premium because State Farm was dropping me – and at least one insurer wouldn't cover me – because I had the temerity to avail myself of my homeowner's insurance, which I paid dutifully for 11 years. And then a derecho moved through the area and wiped out a couple of my trees as well as a portion of my fence. I had no control over that storm.

And then I had the temerity to avail myself of my homeowner's insurance again a year later when a slow-moving – or stalled – thunderstorm dumped inches and inches of rain across the area and the power went out which meant my sump pump failed and my finished basement took on water. I had no control over that storm nor the power company's inability to keep the power on.

(Here's another handy bit of information in case you aren't already aware: If your basement takes on water, so long as it's storm water, not sewer water, odds are it can be cleaned up and you won't need to tear out the carpeting and drywall and baseboards and such.)

Once the damage was remediated, and not wanting to go through that again, I had a natural-gas-powered, hard-wired generator installed. They're very handy things, generators. They are not, however, inexpensive.

And then I had the temerity to avail myself of my homeowner's insurance again two years later when this winter dumped feet of snow on the ground and then rain arrived on top of it and though I shoveled snow away from my foundation and the power stayed on and my sump pump pumped, tree roots had grown into my sewer line and the volume of water trying to get out to the sewer was too great to get by the roots, and so – joy of joys – my finished basement took on water again.

We had another storm-related outage in July. My power was out for two days. If not for my generator, I would have had water in my basement again. (Even if you have an battery back-up attached to your sump pump, those batteries only last for so long.)

So when I received the notice that State Farm was dropping my coverage, I called my agent's office and spoke with a very nice member of his staff. And then, a day or two later, I spoke with my agent himself. I told him about the generator. I told him of my intended maintenance schedule to keep my sewer line rodded. He said he'd file an appeal.

He called back a week later to say that my appeal was being denied. The reason cited by corporate was that my generator was unable to keep up with the sump pump the first time my basement took on water.

"No, no, no," I said. "I didn't have the generator when that happened. I got the generator in response to that incident, which, ultimately, saves State Farm money."

He said he'd appeal the decision.

He called back a week later to say that State Farm was sticking with its decision to drop my coverage.

He was very apologetic and offered the number of a broker who might be able to help.

Through it all, I was very cordial to everyone I spoke with at the local office. I knew that they were doing what they could to retain my business. After all, my being dropped means less money in the agent's book of business; he's the one taking the direct financial hit.

His staffer thanked me for not yelling at her. I'm sure she finds herself on the receiving end of a lot of anger.

And then she, rather sheepishly, suggested that I consider State Farm when I need insurance again someday.

I laughed and said, "I can't imagine State Farm will be willing to take me on again."

"In five years," she said. "If you're shopping for better rates. State Farm will look at you again if you don't have claims for five years."

I didn't bother to tell her that there is no way in hell I will do business with State Farm again if I can help it.

But the State Farm amusement doesn't end there. Oh, no.

My auto insurance – which renews in mid-November – is also with State Farm. Once my homeowner's policy went out of force, my auto policy no longer qualified for the multi-line discount.

So State Farm sent an invoice to me for $20 and change, for the now-shortage.

Seriously, State Farm? After everything the company has put me through, for a policy that renews in a matter of weeks, someone there should have said, "Oh, let it go. Just send her a renewal notice at the increased rate."

I appreciate that all of this is automated, but still. It was irksome to receive that statement.

And then, as if to supply the cherry for this insurance-saga sundae, a week or so later, I received a letter "from" my local agent – again, auto-generated, I'm sure – that begins:

"Dear Beth:

Make sure you're getting the discounts you deserve.

Your business means a lot to me, and I hope you've already discovered why State Farm has such a strong reputation for customer service."

Yada, yada, yada.

In the end, I did find insurance. (No, I will not reveal the provider, not because I don't want to write nice things about the company but because I don't need to disclose that level of personal information for the entire world to read.) And I bundled my auto insurance. The first payment is due next week.

Which means that State Farm will have to send a wee check to me for the balance of my auto premium which would have renewed in November.

And that makes me smile.

So, there it is.

Caveat emptor, kids.

Ask questions about your insurance.

Know more than I did.

Query before you claim.

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