Insurers turn nasty if you ask questions

April 10 2010 by Ellen Roseman

You call a home insurance company to ask a question. Perhaps you’re thinking about making a claim, but you don’t know if it’s worth making a claim. Later, you decide not to go ahead.

Guess what? Your home insurance rates go up the next time you renew, just because of your inquiry. Who cares that you didn’t make a claim? The fact you asked was enough to raise your premiums.

Asking questions can lead an insurance company to cancel your policy. Or if you don’t have a relationship yet, it may reject you based on what you say. Read TB’s story below about Bel-Air deciding not to take her business after she asked about fixing up her new home before moving into it.

Meanwhile, home insurance companies are asking you more questions. In particular, some now ask permission to check your credit score. You’re free to say no, but this means you’ll be treated as if you had a low credit score and your rates will go up.

CBC Marketplace ran a story about home insurance and credit scores last night.

It also did a segment on Bloomex, using Terrie’s story from my blog (Feb. 17, 2010). Hey, Marketplace, I often give you credit. Why didn’t you return the favour after I helped you with your Bloomex story?

Finally, I have a tale of a couple who qualified for a home insurance discount because they lived close to a fire station. Their insurer, Coseco, refused to give them the discount because they hadn’t asked the right questions. They appealed to the consumer complaints officer and got some money back, but not what they felt they deserved.

Home insurance is unregulated, unlike car insurance (where insurers are barred from using credit scores to set rates). Maybe it’s time the provinces stepped in and imposed more discipline on home insurance.

After all, if your home is not insured, you can’t get a mortgage. And if you’re dropped by your insurer, you may find you’re blackballed. No other companies will take your business either.

10 comments

  1. TB

    Apr 10 2010

    I recently purchased an existing home, actually beside my parents’ house.

    Because I would like to paint, take out the carpets and rebuff the floor and change the tub and toilet in the bathroom, I thought I would stay at home and move in once this stuff was done.

    So I called Bel-Air Direct to find out about home insurance (because I currently but will no longer have my car insurance with them).

    Since I told the agent that my ideal situation would be to take my time doing the above mentioned projects (which they consider major renovations???!!!!) and live at home while this was happening, I was told they won’t insure me.

    I went on to explain to the agent, and then again to a supervisor, that I was calling to educate myself. Yes, taking my time would be the ideal situation, but the house was completely livable and I could move in on the day I’d get it.

    I was basically told that because of what my first inquiry was, I will not be insured by them.

    They did not seem at all interested that they were losing me and my family (who will all change due to this terrible service).

    My questions to them is: How are customers supposed to educate themselves on what is possible when we are penalized for asking honest questions?

    Their answer to this was, basically, tough luck and let’s part ways.

  2. Ellen Roseman

    Apr 10 2010

    This reminds me of the last time that home insurance rates were rising sharply and companies were cutting off customers. This is from a column I did on April 23, 2003.

    ————————————————————

    Bill and Isabel Coleman were cut off just for asking their home insurer if it would cover repairs on a broken sliding glass door.

    “The broker sent an adjuster to cover the damage,” say the Bowmanville couple. “The adjuster advised us the repairs would cost about $2,500. We subsequently got an estimate on our own for the amount of $300.”

    After paying for their own repairs, the Colemans were told their home insurance policy would not be renewed on May 1, 2003. They looked for new coverage, but were refused after revealing they had been cancelled by their former insurer.

    “We explained we hadn’t filed any claims – in fact, we haven’t had a claim in more than 20 years – but the brokers all said it doesn’t matter. The insurance company treats it as a claim even if no money was paid out.”

    The couple finally found a broker who could arrange insurance with another company at an additional cost of several hundred dollars.

    Customers can also be cut off for not handling their finances responsibly. If you pay for insurance with monthly debits from your bank account, you’ll get into trouble if there’s not enough money on the day the payments come due and you haven’t arranged for overdraft protection.

    “Two instances of non-payment each year are grounds for cancellation with a number of companies, ” says Mark Yakabuski, Ontario vice-president of the Insurance Bureau of Canada.

    And what if you switch banks or credit cards and forget to tell your insurance company? With two failed attempts to collect – before you’ve been notified the first payment didn’t go through – your insurance can be cancelled and you’ll be stigmatized as a bad risk.

  3. VW

    Apr 10 2010

    My wife and I have a problem with our home insurance.

    At the end of last year, we switched bank accounts and went through a process of changing our payments to the new bank. However, one of the payments to an insurance company, Coseco, got missed.

    My wife phoned them to make sure we were still covered and to make up any shortfall. During the conversation with the CSR and a review of our coverage, we found out that we had been paying too much per month.

    The reason? We were charged extra because the company thought we were more than 8 kilometres from the fire hall, when we were in fact only about 1 kilometre away.

    Things get complicated as our original insurer, Direct Protect, was taken over by Coseco about 2 years ago. When we first moved into our present house, almost 7 years ago, the only question we were ever asked was about the location of a fire hydrant, not how far away the fire hall was.

    Our current company has also never asked this question.

    My wife, quite understandably, was upset that we were paying more than twice as much as we should have been and asked for a refund of the excess. The CSR only offered us around $45, which my wife considered an insult.

    She wrote a letter to the company and we received a call from a supervisor a few days later. The person offered us one year of excess payments, $826.34, which we agreed was a much better offer.

    However, we reiterated that it was nowhere near what we were expecting. The supervisor wouldn’t budge on the amount, which we grudgingly took.

    We may have been paying extra for almost 7 years. Coseco has had our policy for 2 years, so at the very least, we should be entitled to another year’s excess payments.

    We were paying $157.79 a month, which was reduced to $73.76. That’s a substantial reduction and, consequently, a substantial overpayment. If you can possibly help us get more of our overpayments back, we would be very happy.

    ———————————————————–

    Ellen’s response:

    Hi VW, thanks for writing. I’m often asked about cases like this when companies make mistakes and won’t give full refunds back to when the mistake occurred. They say the consumer is responsible for checking bills and asking about excess charges.

    Of course, this is hard to do when it comes to home insurance. Consumers don’t know what the right charges should be.

    Before I handle this complaint, I’d like you to try Coseco’s consumer complaints officer, Denise Fleischmann, 1-877-795-7272, #4056.

    Each company has such a person. Their names and contacts are listed at the Financial Services Commission of Ontario’s website,

    http://www.fsco.ca/english/insurance/resolvecomplaint-insurance.asp

    Feel free to use my name on any letters or emails you send to her.

    ————————————————————

    VW again:

    We wrote to Denise Fleischmann and got a response back (see below).

    My wife and I are not very happy about this. We still maintain that we were never asked about the location of the fire hall, just the location of any working fire hydrants.

    My wife is the one who handles these things and she would have asked me where the fire hall was, if she was asked.

    ————————————————————

    Valerie Day for Denise Fleischmann, ombudsman liaison officer, Coseco Insurance Co., March 15, 2010:

    FINAL POSITION

    The company has thoroughly investigated your request to look into the history and rating of your policy.

    The company has recently refunded premium due to the change of information yoiu provided, regarding the proximity to the fire hall being less than 8 km.

    Originally, when the policy was set up, the required scripting asked whether the fire hall was more or less than 8 km. The answer provide don record at that time was more than 8 km, so premiums have been based on that information.

    This has always been a mandatory rating factor and question asked when quoting a home policy. In the past two years, the question changed to request the specific distance to the fire hall in kilometres.

    The premiums charged on past renewals were correct, based on the information you provided at the time of writing this policy.

    The company did agree to backdate this recent change to Feb. 1, 2009, and you have received this refund, but they are not able to backdate any further, based on the information on file.

  4. Cynthia

    Apr 10 2010

    Hmmm. I call every year to see if they have a deduction for my content insurance as I have sprinklers in my apt. As of yet, there is not. However, this policy covers a pool. Go figure. My policy goes up every year, but by minute amounts. I will be glad when I can see the price to drop.

  5. Jennifer Fowler

    Apr 26 2010

    Hi Ellen,
    You’re absolutely right! We should have thanked you for the help with the Bloomex story. You were very generous with your contacts and we were grateful. I plan to do a follow up on our blog so I’ll give you a shout out there!

    Jennifer Fowler
    Producer, CBC Marketplace

  6. Susan

    May 6 2010

    The public needs to take a stand on homeowners premiums based on credit scores. Has anyone started the ball rolling through parliment?

  7. Question for Ellen

    May 19 2010

    Hi Ellen, I just recently pulled my credit score. I noticed that my car insurance company did a soft credit inquiry on me two months prior to my renewal.

    I don’t ever recall granting authorization for this type of check. I rarely talk with them. I have my car insurance with The Personal.

    Is there more information about these insurance companies doing these types of checks, especially regarding existing customers?

  8. KD

    May 28 2010

    Hi Ellen,

    I stumbled on your blog while looking for ways to get out of our Summitt Energy “contract”, and wanted to share my home insurance debacle.

    Two years ago, we bought a house that was in desperate need of repairs, and so very inexpensive. We knew, going into it, that the house needed all new plumbing, new electrical wiring, new shingles and had no heating system (other than electric baseboards — the furnace had been removed and the ducting was bad).

    When we bought it, the house was insured through a broker in a neighbouring village for roughly $600 a year. We called to arrange the insurance, and were told that it would cost us $1,400 a year because we would be improving the value of the house by renovating.

    This made absolutely no sense to us, given that for so many years the rate with the previous owner had been very low, and that the renovations had nothing to do with improving the value of the home, merely bringing it up to livable standards. So we went elsewhere.

    Finally, discouraged, we settled with a broker at a similar price. They required us to remove all the old plumbing and upgrade parts of the electrical wiring. This required that we remove drywall.

    We decided to have all of the plumbing and wiring redone, and so we went ahead and removed nearly all the drywall (80%). We planned on installing a new furnace, and so we removed the baseboards.

    We weren’t yet living in the home, but eventually we had to move into the house mid-renovation. And then we ran out of money, so we had to stop the renovations.

    We had a wood stove in the basement, and as the weather got cooler, we decided to tough it out and heat with wood until we had enough money to install a heating system.

    Then the insurance came up for renewal and the price had increased by $500 or so a year without any explanation. We called around, and got a much more reasonable quote from State Farm. My husband signed all the papers and was told that from that day forward we were insured with them and it was okay to cancel the previous insurance.

    Two weeks later, the State Farm rep decided he wanted to check out the wood stove installation. He came to the house when we were not there and my mother-in-law let him in (NEVER DO THIS).

    He wandered around, went upstairs, and took pictures of everything. At this point, if he had told us we would be refused insurance, we could have remained with the previous insurance company. He didn’t. He told MIL that everything was fine.

    My husband cancelled with the previous insurer because the deadline was coming up, and as far as we knew, the State Farm inspection was OK.

    Two weeks after that, we got a letter saying that State Farm would not insure us because our house was not up to their standards. He cited no drywall, bad roof, and “dogs running rampant” as reasons for refusing us (we have 2 pets).

    He told us we hadn’t actually ever been insured by them, and that he could put the application through, but we would be refused, resulting in a black mark against us. At this point, we tried to get back with the previous insurer who then refused to take us based on our insurance having lapsed.

    The broker finally found a company willing to insure us, on condition that we also insure our car with them. Because we were now “high-risk” customers, our total annual insurance cost for the house we bought for under 100k and an old, worthless car was $4,300.

    We were told that after 2 years, the black mark would be removed and the price would go down. After a year of this insanity, cursing at the $ going out in insurance instead of going into the house as drywall/repairs, and selling the car (so insuring only the house), we got the renewal. The price went up another $100 a month.

    This time, we were successful at finding a different company to insure us, based on a much more realistic evaluation of the house. We insisted on having the house inspected immediately, and we waited for the written contract before cancelling with the previous company (Intact).

    We are now paying something around the original cost of $1,600 a year. It still seems ridiculously high to us, but lesson learned.

    The State Farm rep did us a huge disservice. It was a real shock to learn that we could potentially have found ourselves unable to get insurance and losing our home because of an insurance agent’s neglect.

    Thanks for listening!

  9. CH

    Jun 10 2010

    Hi Ellen, I’d like to ask the same thing that “Question for Ellen” posted on May 19. I thought that auto insurers could not use credit information. Here’s my story.

    I called my insurance company to ask a question about my policy. I had been in touch with them about six times in the past year with changing vehicles, that sort of thing, and was asked to update my information on the second to last time.

    Most recently, I was told that my “consent statement” on file had never been completed and that I must say yes or no to this statement immediately before proceeding. Saying yes meant that I could ask questions on my policy, as I always have.

    Saying no, or not consenting, meant they would not talk to me and – (long story short) – would not renew me as a policyholder since I’ve said no. I did not want to give that blanket consent.

    I wasn’t originally with this company, but was acquired by them when my previous insurer gave up their business.

    The consent statement included such things as allowing my credit information to be accessed and the sharing of all of my information (including, I assume, my credit information) with their affiliates for the purposes of marketing. I don’t have the statement in detail as it’s a verbal thing and it’s not on their website.

    My hackles were raised because this insurance company is one of the Big Bank firms. I don’t especially want permission for a bank to have my info for the purposes of marketing and the whole sharing of credit information back and forth in a bank conglomerate also leaves a bad feeling.

    It’s impossible to consent to strictly the auto insurance portions of the statement, like access to driver’s record and such. It’s an all or nothing statement.

    They do allow you to opt out of the marketing, which requires a phone call to a voice mailbox elsewhere in the company, but that does not exclude the credit information consent.

    I asked FSCO, which sent me to the bank’s ombudsman. I’ve had no answers yet. But if you’ve heard of this before, I’d be interested in the experiences!

  10. Brenda Kidd

    Aug 11 2013

    If State Farm Insurance Adjusters have Denied Or Prolong Your Claim Or Dropped You Please Sign The Petition Against State Farm…

    http://www.gopetition.com/petitions/statefarmautoaccidentnotmyfault.html
    http://statefarmbadfaithnotatfault.blogspot.com/