One of the factors used to get you lower homeowners insurance rates and additional discounts is the length of your prior continuous home insurance history. An important time to shop for lower home insurance rates are when you have one year, three years, & five years or more of current continuous insurance coverage. However, sometimes customers don’t get the proper credit for the length of their continuous insurance history. My blog post today will give you tips to avoid mistakes & make sure the insurance companies quoting you give you the lowest price for which you qualify.

Why do insurance companies like you to have a long, current insurance history?

Whether it’s for home or auto insurance, claims occurring in the most recent year are a stronger predictor of future claims than the year before it. Claims occurring two years are statistically more important than claims happening 3 years ago, The older your claim, the less relevant it is considered as a predictor of your greater than average risk of having a future claim.

Home insurance companies consider your most recent 5 year home insurance history, if allowed or not limited by state law. If you have had 2 claims in the last 5 years for home insurance, but no claims prior to that for the 20 years you owned your home, you will have trouble qualifying for home insurance because of your recent claims history. Your recent history is most relevant for determining your current risk profile.

Insurance companies often require, and give you a lower rate, for your recent continuous insurance history, because it helps the insurance company verify your claims history.

For example, you have owned a house and have had continuous home insurance on it for 10 years. Last year, due to financial reasons, you let your home insurance cancel for nonpayment. 3 months later, you get a letter from your mortgage company stating you don’t have home insurance, and the mortgage company is going to buy its own insurance policy (which is always very expensive), protecting only the bank’s interest in your property, and charging you for it.

You call your insurance company to get your home insurance reinstated, but because the policy has been canceled for over 30 days, you no longer qualify for reinstatement or a new policy.

Many other insurance companies will not insure you either, because you have been without insurance for over 30 days, even though you had 10 years of continuous home insurance prior to the policy canceling. Your only choices for home insurance are more expensive and may provide limited coverage.

Customers with a recent lapse in insurance coverage are statistically more likely to have future claims than those people with continuous coverage. Also, in the example I used above, the insurance company cannot verify you have had no claims for the period of time you did not have insurance.

For home insurance, previous insurance is often required to qualify you for standard rates. If you have had a need for home insurance, because you have owned a home, you should qualify for most home insurance companies, as long as you have not had more than a 30 day lapse of home insurance coverage in the last 12 months.

If you have not owned a home in the last year, and you are buying a home, you will not need a prior continuous insurance history to qualify for a home insurance policy.

However, you may need to have continuous property insurance for the most recent 3 years to qualify for a claims-free discount.

Use your prior insurance coverage to get the lowest home insurance rates!

1. Know your state’s law to see if it regulates the use of prior  home insurance.

Can an insurance company legally decline to offer you home insurance if you don’t have prior property insurance or a lapse in coverage? If not having prior insurance is creating a problem for you getting decent home insurance quotes, You can check your state’s insurance laws, if this information is available on your state’s insurance department website.

At the very least, your state’s insurance department website will have contact information, so you can call to get your home insurance questions answered. You can find the website for your state here: State Department of Insurance Websites.

2. Know your home insurance history.

As I mentioned at the start of this blog post, some insurance companies may offer lower rates for being claims free and/or having
3 or 5 years of current continuous insurance coverage. Contact your  home insurance company (and other home insurance companies you have had in the least 5 years) and ask them when you started, and if you have had any lapse in coverage.

For example, I call my home insurance company, which has been insuring my home for about 5 years. My insurance company tells me I started with them May 1st, 2007, but I had a lapse in coverage due to a late payment, from May 1st, 2009 to June 1st, 2009, but I have had continuous coverage since the lapse. I know I will have 3 years of continuous home insurance as of June 1, 2012, so I will request quotes effective as of June 1st, 2012, or later.

3. Make sure the insurance company quoting you knows your property insurance history.

If you are about to buy a home, most insurance companies or agents don’t need to know about your prior property insurance history to quote and qualify you.

However, having prior property insurance may qualify you for a much lower rate. Be sure to tell the insurance company your property insurance history. Even if the agent tells you prior insurance does not lower the rate — and it might not — but its not unusual for agents to not be aware it can get you a lower rate.

For example, I worked for an insurance company which required one year previous property insurance to qualify for a claims free discount, but I am sure many agents were not asking about prior insurance, and some of their customers are not getting a discount for which they may qualify.

If you are buying a home and buying home insurance, or shopping for better rates, tell the agent you have had renters insurance for the last 18 months, or home insurance for the last 5 years, or whatever your property insurance history may be. Don’t worry if you don’t have a copy of the old policies. Your prior insurance companies can provide you with any documentation you may need.

4. Make sure you have continuous prior property insurance.

Are you renting now, but plan to buy a house, mobile home, or condo in the next few years? Buying renters insurance now not only gives you valuable, inexpensive insurance protection, but it can help you get lower rates when you buy home insurance.

When you shop your insurance each year as I recommend, make sure there is no lapse in coverage between insurance companies, if you decide to switch your insurance.

Having a long continuous property insurance history, whether you rent or own, not only gets you the lowest rates, but can avoid you not having insurance coverage effective when you need it. Don’t go even one day without coverage.

5. Insurance companies have different rules about discounts & qualifications, and they change over time.

The best thing you can do is to get into the habit of shopping your home and auto insurance with all the leading insurance companies once a year, so you don’t miss the opportunity, when you qualify for a large insurance discount, to save a lot of money.

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