“To claim or not to claim” - that is the question. If you are one of the thousands left without power from Hurricane Sandy, then you may be in the unenviable position of discarding hundreds of dollars of refrigerated items after days of no power. Many homeowners find solace in learning their insurance carrier may provide coverage for food spoilage under additional coverage endorsements. Typically such policies with these endorsements pays from $300 - $500 for loss of refrigerated products called food spoilage coverage. Most companies don't require a list of the actual food lost and pay up to the endorsement limit.
Our insurance agency receives many calls from customers with food spoiled from lack of power. While it is great to tell customers that they may recoup financially for food loss, we also remind customers that putting in a small ($300 - $500) claim could complicate replacing their home insurance coverage in the future.
Some insurance carriers categorize all claims associated with hurricanes as catastrophic or what the industry calls CAT claims. These carriers will overlook the food spoilage claims at the home insurance policy renewal. This means you the customer may keep a loss-free premium credit.
"We also advise that putting in a $300 claim could complicate replacing your home insurance coverage and cost in the years ahead."
On the flip side, some consider any claim a claim. There are a number of insurance carriers that do not forgive food spoilage as a CAT claim. If you have a policy with one of these carriers, you could lose your loss free credit at renewal. This means the $300 claim check could eliminate a loss free credit for three to five years. It’s not unusual to have a $200 - $500 loss free credit. Add this up and the $300 could cost you $1000 or more in claim free credits with some companies.
Looking ahead at the big picture- the same customer with a company that is forgiving the food spoilage may find they want to change carriers in a year or two. When the agent shops your home insurance for you, the $300 food spoilage claim may limit the markets available for comparison pricing. Our agency has great relationships with many insurance carriers but we can't change history. Instead of 20 companies with competitive rates, there may only be a handful or fewer of home insurance options for those who live in coastal towns. These include the Cape, Islands as well as Hingham, Cohasset, Scituate, Marshfield, Duxbury, Kingston and Plymouth.
Home insurance premiums are expected to trend upwards over the next few years as a result of so many severe storms. These include tornadoes as well as seemingly regular hurricane events. Keeping your insurance profile squeaky clean including no claims, timely premium payments, excellent credit history and maintaining your home will help you benefit from more insurance choices in the future. Our agency can help advise how best to proceed with any claim or market your insurance for the very best home insurance choices.