Insurance: Should you file a claim?

woman with property insurance questions
Should you file an insurance claim?

My bathroom flooded should I file an insurance claim?

You paid for property insurance so when there’s an issue, insurance takes care of it, right?

Maybe yes, maybe no.

Two years ago, the basement in my rental property in Fort McMurray flooded. I called insurer A and filed a claim. Restoration of the basement suite was in the 30K range and I was relieved my policy covered the cost.

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.

On New Year’s Eve, my Calgary property had sewer backup.  I called insurer 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 asked why, I was told it was because I had filed two claims within a five- year period. They also mentioned a phone call about another issue, with insurance company A, two years prior. Although I had not filed a claim.

Why would insurer B cancel my insurance if both properties were insured under two separate policies when the separate claims were filed? The response was that the claims followed me, not the houses. 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 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. 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. I  asked for advice from a friend in the industry. His recommendations;

  • Absorb any claim under $5000
  • 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 claims follow you five years
  • After your first claim passes the five-year mark, you’re golden

Insurance  isn’t much of a concern until there’s an incident. If I knew what I know now, I would have done things differently.

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