My bathroom flooded – should I call my insurance company?

should I callThis may sound like a silly question.  I paid for home insurance so that when there’s an issue, I can have insurance take care of it, right? It seems obvious.  Maybe yes, maybe no.

Two years ago the basement of my property in Fort McMurray flooded through sewer backup.  I called my insurance company (insurance company A), and filed a claim.  Restoration of the basement suite was in the 30K range and I was relieved to have had a policy that covered the expenses.

The following year, I bought a fixer upper in Calgary.  It made sense to have both the Fort McMurray and Calgary properties insured with the same insurance company.  The cost to insure both properties was expensive because of my previous claim and the previous flooding in the city of Calgary, two years ago. However, I felt reassured I had good coverage.

On New Year’s Eve, my Calgary property had sewer backup from a pre-existing issue the previous owners did not disclose during the purchase of the property.  Again, I called my insurance company (insurance company B) and filed a claim.  This repair was far less expensive; the cost was under $5000.

A month later I received a registered letter from insurance company B informing me they were dropping me as a client. When I called to ask why, I was told that I had filed two claims within a five year period. They also mentioned I had made a phone call about another issue, with insurance company A, two years prior with the Fort McMurray property (even though I had not filed a claim).

Why would insurance company B cancel my insurance if both properties were insured under two separate insurance policies when the separate claims were filed?  The response was that the claims followed me, not the houses, and I was considered a high risk client. Apparently, filing two claims in five years is the formula for dropping a client.

Finding another insurance company wasn’t easy, but I managed to find one (insurance company C) with good coverage for a much better price.

Two months later I got a call from my Fort McMurray tenant.  He was hearing a dripping sound behind the wall; could I send someone in to take a look at it? The drip ended up being a far worse problem than I could have anticipated. The water pipe to the outside hose cracked and had been leaking into the bathroom and furnace room for months, causing damage to walls, floors, and mould growth.  Everything had to be removed, including the shower. The cost for gutting the bathroom?  $8000.

Since I had been dropped once already, I didn’t want to take the chance of having my insurance cancelled again, although I didn’t call insurance company C, I did ask for advice from a friend in the insurance business. His recommendations?

  • Personally absorb any claim under $5000
  • Insurance claims should be used for big ticket items only – $5000 and over including the deductible
  • A call to your insurance company for a potential claim is noted on your file and can be used against you
  • Your insurance claims will follow you for five years
  • After your first claim passes the five year mark, you’re golden

Probably like most people, insurance isn’t much of a concern until there’s an incident. Had I known what I know now, I would have done things differently  – absorbed the cost of the Calgary damage and filed a claim for the bigger ticket item in Fort McMurray.

Although I can’t undo any of my insurance history, hopefully my hard learned and expensive lessons will save headaches and money for others.