This may not sound like much to you, but these are big red flags for insurers.
- Rental insurance companies may deny claims if they believe the claimant or the property is too risky to insure.
- Just because an insurance company refuses a tenant doesn’t mean others will.
Renters insurance is not as complex as other types of insurance, and it is not too difficult for most people to obtain. This type of policy provides significant liability protection for the renter, not to mention coverage for their personal property. But not every app is guaranteed to be approved. Here are five common reasons an insurance company might deny a tenant’s claim.
1. Location issues
The location of a house or apartment affects its risk of natural disasters. Renters insurance companies assess the likelihood of all kinds of natural disasters when setting premiums. The same is true for home insurance. Policies for high-risk areas generally cost more because there is an increased risk that the insurer will have to pay a claim. And if the risk is too high, the company can refuse to underwrite the policy completely.
For example, if a ground floor house or apartment is located very close to the coast in an area prone to severe flooding, this could make a company reluctant to insure it. The same goes for a rural house far from the nearest fire station. If the rental were to flood or catch fire, the insurer would have to pay a massive claim for the tenant’s property that was damaged or destroyed in the accident.
2. Household Hazards
Certain items, such as swimming pools or trampolines, are considered safety risks and may increase the cost of insurance. A pool may not be an issue for a tenant if it is an owner-operated community pool. But if someone is renting a private house with a pool, insurance companies might worry.
If the tenant were to invite guests and the guest were to injure himself, he could sue the tenant. The tenant would then have to fall back on the liability coverage of their tenant insurance, which could lead to a massive claim.
Renters must dispose of their pets with more than their owner. Insurance companies usually want to know about them as well. Certain dog breeds are known to be more aggressive and are more likely to bite people than others. This is another situation that could lead to huge liability claims against the insurance company.
Some companies can get around this problem by offering to sell renter’s insurance with a dog bite exception. This means that the company will pay for other types of liability claims, but it will not pay for dog bite claims.
4. Claims prior to rental insurance
As with any type of insurance, the more claims the policyholder has filed in the past, the more expensive their policy will be. And if they file too many claims, they may struggle to get coverage. Several rental insurance claims filed in a few years suggest that the tenant may not be at fault or that he is taking unnecessary risks.
Usually, when filling out an application for renters insurance, companies ask for a claims history for the previous three to five years. Exact requirements may vary by state and insurance company. Most insurers will want to know what type of claim the claimant filed, when it was filed, and how serious the incident was.
5. Expired coverage
Renters who previously had renter’s insurance but let their coverage expire may have difficulty getting new coverage. An outdated policy suggests that the individual may not be responsible and may not be able to keep up with their payments in the future. This is a major red flag for insurance companies, which are doing everything possible to minimize the risks for themselves.
But just because one company turns down a candidate doesn’t mean they all will. The best thing for a renter who is denied coverage is to explore other options. Check with a few other companies and compare rates side by side to see which offers the best deal.
The Best Home Insurance Companies in Ascent for 2022
There are many home insurance companies to choose from. We’ve researched dozens of options and picked our favorites here. Looking for a green building discount or easy bundle policies? Want an easy to use interface? Read our free expert opinion and get a quote today.