Frequent claims blamed for insurance non-renewals

Published 12:00 am Friday, June 28, 2002

A national trend of increased insurance rates and non-renewals is making its way to Lawrence County and could cost homeowners big.

It was reported in the May 14, 2002 edition of the Wall Street Journal that frequent claims, the depressed economy and huge losses suffered by insurance providers all equal rate increases or "high-risk" homeowner's policies being dropped.

"I can see the trends headed this way," Rich C. Mountain, agent at Scherer-Mountain Insurance, 209 S. Third Street, said. "Eventually, the people of Ironton may suffer and I do not want to see that happen."

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While there may not be anything to stop this trend, Mountain said it is important to help educate people as to things they can do to lessen the chances of being dropped.

The average homeowner only files a claim every eight years and it is more damaging to your record to file several small claims than one large one, Mountain said.

An Ironton-area family, the Roachs, learned this firsthand in 2000 after a string of bad luck caused their local provider to drop them.

On May 23, 2000, Bruce Roach was cutting the lawn at their summer home in West Virginia. A rock shot through a window of a passing vehicle. They filed a claim for $428.

In June, 2000, a candle accident burned a maple desk, a laser jet printer and a digital camera. The claim paid out $1,311, plus a $250 deductible. On October 15, 2001, a kitchen fire --

attributed to a malfunctioning stove --burned up the Roachs new kitchen. This third claim was for $7,508 plus the deductible. This paid to clean the walls and carpets but her kitchen is still a mess, Ann Roach said.

Within a few weeks, they received a notice of non-renewal despite the fact that they had held insurance with this company off and on for the better part of 38 years.

"I didn't feel that I had ever abused insurance or that I deserved this," Ann Roach said. "But, I was just a number to them. It was because of my actions that they didn't have to pay the whole policy."

An Ashland, Ky. man, who wished to remain unidentified and will be referred to as Jones, had his insurance dropped for making two claims within a year.

Jones had a roof leak in 2001 that damaged approximately $2,000 worth of stereo

equipment. He filed a claim, but then canceled it because the equipment dried out and still worked.

A few months later, an antique Nikon camera valued at $3,000 was stolen. He filed a claim and was paid. Two months later he was notified that he was being canceled because he had filed the two claims.

They said it didn't matter that they only paid on one because it had still occurred and he was now deemed a risk, Jones said.

These are not isolated cases. Insurance carriers across the state and the nation reflect this trend.

State Farm Insurance Co., the largest insurer in Ohio, reported a $5.6 billion underwriting loss last year. The company has ordered that no new homeowner policies be written in West Virginia and as many as 20 other states. Rates for insurance are expected to increase nationally, Brian Maze, public affairs specialist for State Farm, said.

"The odds are very good that people in Lawrence County will see a rate increase, regardless of the company," Maze said. "It is important for people to know the industry didn't have a good year."

The economy has contributed to the problems and the rates in Ohio will still be very competitive nationally, despite an increase, Maze said.

Various factors including the economy, the weather, mold, Sept. 11 and medical costs all contributed to the losses. A hailstorm in Dayton alone last year cost State Farm nearly $90 million, Maze said.

Maze and Mountain both emphasized that for every person negatively affected there are hundreds of people who have no problems.

"Under one percent of our customers will be canceled or non-renewed," Maze said. "We look at each claim and policy on its own merits."

"We are not just raising rates for the sake of it," he said. "We are making these changes to benefit all our policy holders."

They also agree that home maintenance and only making large claims are good ways to stay out of trouble. Michael Caldwell/The Ironton Tribune