The Hidden Cost of Claims: Why You Need to Audit Your Insurance History NOW

Welcome to this week's Monday Morning Coffee Talk!

Today, we're diving into a topic that affects every single homeowner and property investor: insurance policies and the rising cost of coverage. It’s no secret that insurance companies are raising their prices. And when those prices go higher and higher, the bottom line is eventually going to fall on you.

This trend makes it absolutely essential to be proactive about managing your risk profile. A seemingly minor detail from years ago could be silently inflating your premiums or even leading to a policy rejection.

The New Reality: Claims History is Everything

Insurance companies are becoming far more selective and are heavily scrutinizing the claims history associated with both the property and the person seeking the coverage.

The critical lesson here is to be more selective about the claims that you pull—either on your personal residence or your investment property. Small, manageable issues should often be absorbed, as a claims history can become a long-term financial burden.

Your Two-Part Insurance Claims Audit

To protect yourself and your investment, you need to perform an immediate, two-part audit of your claims history. This is the first step in controlling your costs and ensuring you can secure coverage when you need it.

1. Audit Yourself

First, you need to understand your own history.

Do an audit on yourself as someone who has made claims to insurance companies for your home or previous homes (both investment and personal) in the last five years.

Even if the claim was on a different property you no longer own, that history follows you. Multiple claims can flag you as a high-risk individual, which will significantly impact your rates on future properties.

2. Audit the Property's History

Second, you need to audit the history of the house itself.

You also need to do an audit where a previous owner might have done a claim in the last five years.

When underwriting a new policy, the insurance company will look at the property’s claims history, regardless of who owned it at the time. A pattern of claims indicates a high-risk property—perhaps one with underlying issues that haven't been fully resolved.

The Red Flag Threshold

The key pattern you are looking for is recurrence. If you find two or three claims against your house or your person within five years, that is a red flag.

If your combined audit reveals a high volume of claims, it means one of two things is likely to happen:

1. Your prices are going to go up dramatically.
2. You are going to be rejected for coverage entirely.

This is important, you guys. The time to be vigilant is now. By understanding the risk you present—and the risk the property presents—you can make smarter decisions about when to file a claim and what properties you choose to invest in.