Did you know if your homeowners, condo, landlord, fire or other type of home policy has the WRONG Homeowners Protection Class listed it WILL affect your Rate? Did you know that you are ultimately responsible if it’s wrong?
A protection class is based on two general factors, questions of which are asked of you on your policy application, hence your responsibility if it is wrong:
- The distance to the nearest FIRE HYDRANT
- The distance to the nearest FIRE DEPARTMENT
When your home has a fire hydrant within 1000 feet and a fire department within 3 miles, you’re homeowners protection class will generally be a 3, 4 or 5 and if not, generally an 8, 9 or 10. There are some other factors involved as well, such as the fire department being paid or volunteer, but this is the rule of thumb in general.
The “lower the number” of the protection class, the “lower your homeowners premium”.
I have, unfortunately, seen some sneaky, sales hungry, I only want my commission type agents put down that there IS a fire hydrant within 1000 feet and there IS a fire department within 3 miles on their clients applications, usually unknown to the client, when in fact there is NOT! This gives them a hero-like appearance when in fact the clients previous company had them rated properly. Now here flies in Mr. Super Savings Agent, so the client switches companies and starts saving a lot of money, right? WRONG!
Well, in a tough economy, this may be tempting, but guess what… YOU, the INSURED are ULTIMATELY responsible because YOU are signing off on the application that ALL the information is ACCURATE! I’m sure you’ve heard that ”ignorance is no excuse for breaking the law”!
If you do not understand something on your policy – it’s as easy to find out the answer as doing a google search or by CALLING the CARRIER directly!! Many do accept incoming calls even before you are a client!
What are the ramifications to the AGENT? Rest assured, once caught, the state department of insurance will not go easy on them if they find out it was an INTENTIONAL and recurring act specifically to ‘win over business’! The insurance carrier will more than likely terminate the agents contract and the agent may face criminal charges.
BUT that does NOT let you off the hook! You are also responsible, so what can happen to you?
The carrier (depending on your state laws and guidelines) may
- Drop your policy which would not be good when shopping it around
- Increase your premium to what it should have been
- Calculate the lost premium and take the difference out of your claim
- Do nothing (fat chance!)
- Do something else that your particular state allows
The question to you… Is it worth saving a penny today to put yourself, your finances and your family at risk tomorrow? (not in my opinion!)
Incorrectly rated policies are another reason that cause insurance premiums to go up! When people in a higher risk class pay rates that are for a lower risk class, it throws the premium calculations off and ultimately causes everyone’s rates to go up! When done intentionally or just ‘letting it go and pretending you weren’t aware of it’ (which now that you read this article, you are!), it’s called insurance fraud and that is NOT something you want to be found guilty of, as it will stay with you for years to come!
Simply put. I’m sure you want your insurance company to BE THERE for YOU when you NEED them, right? Well do right by having your information accurate and properly disclosed and BY LAW they WILL be there when you need them!
Contrary to some beliefs, yes insurance companies are in business to make money, but NO, they do NOT seek out ways to not pay claims! That would be fraud on their part. So how can you protect yourself? Be sure to only do business with an insurance carrier who files their “policy forms and underwriting guidelines” with the state department of insurance that you are accepting the policy in. This way, the carrier has to pay when your policy says its time to pay. If you are unsure about the rules and regulations in YOUR state, simply visit your states department of insurance website or give them a call and ask them how you can be sure your assets are protected in the way you think they are!
Have you had this happen to you? Do you know of someone who it happened to? Please do NOT post the names of people, carriers or agents, but do share your story or experience to help others protect themselves from this happening to them and why they should be sure their policy is listed correctly!