Rental Property insurance denied

[Russ Roslewski]

Hello, I enjoy reading the advice on this forum.

My wife and I have owned two rental properties in the OKC area for the last several years. Our rental property insurance is with USAA, who also has our homeowner's insurance (and auto policies).

In August we bought another rental property. USAA would NOT insure this property due to our "claim history". In May 2013, a tornado came close to both properties and resulted in damage resulting in two claims (nothing as major as you think - just re-shingled roofs. Our bad luck - the properties are about 5 mile apart). Their policy, according to their representative, is that if you have 2 claims in the past 36 months they will not place any additional policies with you (but will keep current policies). The fact that we're talking about 2 claims spread among 3 properties (2 rentals and our primary residence) did not matter, it was handled the same as 2 claims against 1 property.

Okay, so we contacted some other insurers and finally settled on State Farm. We identified the situation to the agent, who said it would be no problem, and he wrote the policy. A few weeks later we get a letter from State Farm itself, saying it has denied our policy and it will be canceled in a few weeks.

Is this normal? How can you own multiple rental properties and NOT have a couple of claims every once in a while? USAA does have an agreement with a third party company, but they were much more expensive for much less coverage. I guess we may just have to go with that until May 2016, when we hit 36 months.

Any wisdom or additional ideas?

Thanks,

Russ

[Jacob Passmore]

Oklahoma is a lot like like Texas right now in regards to Insurance, we've been pummeled with string after string of storm related events. Wind/hail deductibles are increasing (if coverage is provided at all), and this usually affects the captive insurance companies first, those mentioned, and others. It takes an independent agent with knowledge of the current marketplace to find companies that are willing to pick up the slack. 

**A good piece of advice is to go back to company that you had the original claims (tornado loss) with and ask them to provide you "loss runs" this will be an official manuscript (sounds fancy, it's not) from the company that details the loss including the amount that was paid out. This helps you because; when you go to your next agent, he/she can provide sufficient evidence to different carriers, on what the loss ratios, etc, actually are. Tolerance is different with every carrier. As and example: Carrier A might have been fine with 2 total losses totaling 200k, but when they did a report, and found out it was 2 losses for 750k, it violated their underwriting guidelines, and they issued Notice of Cancellation. Feel free to reach out, if you'd like some additional detail about this.