Property insurance, once you have it if anything happens, you’re covered, right?
Maybe yes, maybe no.
Two years ago, the basement in my rental property in Fort McMurray flooded. I called insurance company A and filed a claim. Restoration of the basement suite was in the 30K range, and I was relieved my policy covered the cost.
The following year, I bought a fixer-upper in Calgary. It made sense to have both the Fort McMurray and Calgary properties insured with the same company. The cost for both properties was expensive because of my previous claim and the previous flooding in the city of Calgary two years ago.
On New Year’s Eve, my Calgary property had sewer backup. I called insurance company B and filed a claim. This repair was far less expensive; the cost was under $5000.
A month later, I received a registered letter from insurance company B informing me they had dropped me as a client. When I asked why I was told it was because I had filed two claims within a five-year period. They also mentioned a phone call about another issue, with insurance company A, two years prior. Although I had not filed a claim.
I asked why company B would cancel my insurance if both properties were insured under two separate policies when the separate claims were filed? The response was that the claims followed me, not the houses. I was considered a high-risk client. Apparently, filing two claims in five years is the formula for dropping a client.
Finding another insurance company wasn’t easy, but I managed to find one with good coverage for a much better price.
Two months later I got a call from my Fort McMurray tenant. He heard a dripping sound behind the wall. The drip ended up being a far worse problem than I could have anticipated. The water pipe to the outside hose cracked and leaked into the bathroom and furnace room for months, causing damage to walls, floors, and mould growth. Everything had to be removed, including the shower. The cost for gutting the bathroom? $8000.
Since I had been dropped once already, I didn’t want to take the chance of having my insurance canceled permanently. I asked for advice from a friend in the business. His recommendations;
- Absorb any claim under $5000
- Claims should be used for big-ticket items only – $5000 and over, including the deductible
- A call to your insurance company for a potential claim is noted on your file and can be used against you
- Your claims follow you five years (ish)
- After your first claim passes the five-year mark, you’re golden. Although in a recent conversation with my insurance company, I was told I could be penalized for up to 10 years.
Insurance isn’t much of a concern until there’s an incident. My experience was that navigating through the cryptic instructions for filing claims was difficult and time-consuming. Agents were not very willing to provide me with all the information I needed. Insurance companies argue in their favour and will always recoup their money one way or another with raised premiums or dropping high-risk clients.
I’m glad they covered the cost of my flooded downstairs suite, but in the long run, it’ll cost me at least a decade of raised premiums and covering the costs myself for any repairs.
If I knew what I know now, I would have done things differently.
I have always been diligent about completing regular maintenance, despite that, I couldn’t have anticipated the flooding or fires of Fort McMurray, I didn’t cause any of my claims history. However, in the insurance world, that doesn’t matter. Hopefully, my hard-learned and expensive lessons will save you headaches and money.
How has your experience with insurance been? I’d love to hear about it, email me; firstname.lastname@example.org
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