While it might feel like paying those insurance premiums every month means you’re amassing funds that can be used later when you need them, as one pair of Denver homeowners found out, there’s no guarantee you’ll see that money again. The couple was shocked to find their insurance policy was terminated when they made multiple claims recently, after paying premiums to State Farm for about 20 years.
The woman tells CBS Denver that when a storm took her chimney off the house, she went right to State Farm for help.
“We turn to the insurance company because our understanding is to turn to the insurance company,” she explained. “That’s what they are there for.”
State Farm paid the claim but then put the kibosh on their policy, and didn’t renew it.
“We were flabbergasted and now the amount we have to pay yearly has tripled,” she said.
It had been the couple’s third claim in two years, for a total of $5,600. The homeowner says it’s a bit of a shock to lose coverage after paying around $30,000 in premiums since she became a customer. But alas, paying in that amount doesn’t mean you’ll get it back out, says State Farm.
“It’s a common misconception that somehow your insurance policy in any way, shape or form resembles a savings or bank account,” said a rep for State Farm Insurance, adding that termination is never easy for the company. She recommends homeowners checking in with their insurance agents yearly and perhaps considering different coverage depending on your needs.
“Understand we do this to remain competitive and provide insurance that’s affordable to all of our existing customers,” she explained.
The homeowner says she didn’t realize making multiple claims would have the result of eliminating her insurance, and hopes that her story will be a warning to others tempted to do the same.
Homeowners Lose Insurance For Too Many Claims [CBS Denver]