Will a power outage damage claim affect our insurance coverage in the future?

Question

A voltage fluctuation caused by Dominion Power neutral wire happened in our residence last week. A lot of major appliances such as AC, built-in microwave and wall oven, dish washer, TV and car garage system did not function after this incident. Dominion Power rejected to compensate the repair and replacement costs, and encouraged us to file a claim to our home insurance company. I am concerned that my name will be entered to the database and have difficulty to get appropriate insurance coverage in the future if we file a claim. However, we don't have much choice since the replacement cost will be at least $5,000 for all the damaged items. Will this claim affect our rental insurance since we have all our residential and rental policies with the same insurance company. Any input will be appreciated!

Joel Owens · Answer

Hi Grace,

I think the disconnect might be other thinking you are a seasoned investor versus a homeowner who might have limited experience in such matters asking for help.

Grace insurance carriers by nature say they are here to help to write policies but really it is to make money.

Many deny claims even if valid or not knowing some people will just give up. That one action alone coupled with other tactics they use keep profits high and outgoing paid claim amounts low.

Grace Wang · Answer

Our agent has never dealt with power surge case before. He was not even sure whether our insurance policy covers this power surge or not until I argued with him for his not helpful service. I appreciate all the helpful insight and thank you for your wisdom. No need to judge our expectation whether it is right or wrong. Nobody is supposed to understand everything in this world. Otherwise, we don't need this forum to share and learn, right?

Grace Wang · Answer

Yes, our deductible is $1,000. You guys are right. I also thought about whether we should have an independent electrician take a look at the damaged items before we filed the claim to Erie Home Insurance. Dominion Power told us not to get anything repaired because they will have an investigator to inspect the appliances. Unfortunately, they didn't even have someone stop by but went ahead and rejected our claim. This didn't surprise me. I guess we are just not experienced but too naive to hope insurance will help to cover this incident and get this matter resolved. VA was quite hot in the past 3 days, so the pending case really ruins our daily life sine we have a baby at home.

I guess it is inevitable to see high premium next year although we have nothing to do with the power surge......

Wayne Brooks · Answer

@Grace Wang

what do you mean by " seems like we didn't get full support from our insurance agent..."  Of course you work with the claims dept., what else did you expect?

Richard Mann · Answer

One thing to remember when calling in about a "possible" claim is that everything is documented so even if you don't make the claim the info you provide will be documented for any kind of future claim.

Joel Owens · Answer

Insurance carriers use (CLUE) reports which are comprehensive loss underwriting exchange.

http://www.nachi.org/clue-reports.htm

The suppressor does sound like something you might want to look into.

Grace what is your current insurance deductible?? What people weigh is paying it out of pocket versus the deductible. Example if your deductible is 500 or 1,000 then you might file the claim as it covers 4,000 or 4,500 if you are strapped for cash. If the deductible is 3,000 or 4,000 etc. then it doesn't make sense  to file a claim to only get a small payout meanwhile your insurance might jump up as a result. In that case you might just pay the whole claim.

Insurance rates can be affected by not only the claim history of a property but the claim history of that individual or entity. Someone might be high risk even if the property isn't if they have a high risk of filing claims on other properties in the past. Conversely a person with a no claim history buying a property with multiple claims will be either uninsurable for some companies as too risky or the policy will be much higher than standard rates to compensate.

I am not an insurance person just sharing what I have seen. Hope it helps.

Grace Wang · Answer

Tim,

Sounds like we didn't get full support from our insurance agent. He asked us go ahead and work with their claim department. I only know we will be responsible for $1000 deductible. We've never filed a claim to home owner insurance, so we are still trying to figure out how to proceed.

Grace

Grace Wang · Answer

Matt,

I really appreciate the surge suppressor idea. In fact, we do feel worried what if it happens again in the future although our house should be a newer one built in 2004. Appreciate your great idea.

Grace

Tim Norris · Answer

The affect on your coverage (filing the claim) is dependent upon the carrier, the type of policy, and other factors.  So, the best place to find out is your Agent or insurer.  Most homeowner policies would cover the power surge you describe, subject to your deductible, of course.  Again, your Agent or insurer should guide you through this.

Matt Devincenzo · Answer

First all newer homes should have breakers not fuses, older homes should be upgraded to breakers if they are not already.

Breakers will protect the circuit in the home from drawing too much power and causing a fire, they will not stop a power surge from outside the home damaging appliances as it pulses through them.

You can get a whole house surge suppressor/protector installed at the panel to prevent issues like this in the future, though I am unsure of the costs.

As far as insurance goes there are a couple of insurance professionals and former insurance professionals here on the boards who can likely give a better answer than me but I'll give you the information as I understand it as of now.

Yes if you make the claim it will be recorded as a claim. It's effect on your rates will likely have a lot to do with your past claim history to date. Also the way I understand it is that to some extent it's not the $ amount of claims that can really cause rates to escalate but the number of claims made.