Monday, April 12, 2010

MSN offers consumers advice on homeowner's insurance industry "secret practices"

MSN and Dell offered visitors a comprehensive guide to the homeowner’s insurance business, with all the dirty little secrets about canceling or dropping people, today. The link is here

A couple of points: CLUE reports (discussed here in July 2009) are based on the property and can be influenced by claims filed by former owners. Insurance companies are more likely to look at insured’s FICO credit scores than in the past, so identity theft can be a real issue.

Some unusual perils (such as lava from volcanoes, sinkholes, or meteors) may in some states really be covered, even though most homeowners need to be careful to purchase special flood, earthquake, or maybe even mudslide or wildfire insurance. People in remote areas may have more difficulty because of wildfire risks in drought-prone areas.

The article noted that some insurers have dropped coverage when a homeowner started a home-based business. On the other hand, some insurers have covered media perils for online activity (libel) as long as the activity was totally “non commercial”. That issue is sure to evolve, and I think media perils should be covered separately, as I’ve discussed on my main blog in several past posts.

It does look like the claims management area of a property insurance company is a bottom-line-driven place to work. It seems to stress manipulation and competition more than "truth", judging from this article.

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