Homeowners Insurance Cancelled Because Of Claim

Administration Pulls Plug on Health Reform Measure

Almost two years ago we told you that the federal government's new long-term insurance program in health-care reform was unsustainable. But the administration added it anyway to make the health care reform law appear to be budget neutral. 

Well, now Health and Human Services secretary Kathleen Sebelius agrees with us, and sent a letter to Congress acknowledging that her department has cancelled this big program because it could never be designed in a way that was actuarially sound. It was supposed to launch in 2013 (See letter at bottom)

So, a big pillar upholding health reform--a new government insurance program that was supposed to help pay for health reform--has crumbled.

Under the "Community Living Assistance Services and Supports (CLASS) program," which was a priority of the late Sen. Edward Kennedy, (D-Mass.), active workers would have purchased long-term insurance coverage, usually through their employer.

Under the program, most individuals would be required to pay premiums estimated by the government at $240 per month at inception. Students and individuals under the federal poverty level would pay only $5 per month. If they became disabled, the program would provide a cash benefit of no less than an average of $50 per day, with no lifetime or aggregate limit. That money could then be used to buy nursing or stay-at home care.

How was this new entitlement program going to pay for health reform? The administration argued from the cash flow it would collect in the future. But the program made a bet that healthy workers would pour into the program--if it only attracted sicker workers, then the program could not afford the payouts. FOX News analyst James Farrell has been all over this issue way before anyone else.

However, the federal government couldn't insure that the program would attract a lot of healthy workers. And we said the most likely people to be participating would be individuals who are very sick and would have higher claims. And now the HHS secretary agrees, after two years of contending these problems could be fixed.

When to avoid making a homeowners insurance claim | Interest.com

In some cases, you might be better if you treat the problem yourself.

Insurance companies have been accused of increasing premiums, or even drop the insured, if they file applications too numerous or if they file the wrong type of claim.

Consumer Reports, for example, states that "insurance companies are allergic to claims" and that even one can result in cancellation.

It also says that if you even talk to your insurance company about damage but don’t actually file a claim, it might still make a record of the damage in your insurance file, where it can be used in future coverage decisions by any insurer.

The magazine advises policyholders that even small claims can lead to increased rates, so they should avoid making claims for amounts not much higher than their deductibles.

Nolo (www.nolo.com), a respected source of plain-language legal advice, also advises against small claims and says that after filing more than two or three claims, "your rates will rise and your policy may be canceled."

Besides avoiding claims altogether, or at least avoiding small ones, the two types of claims consumers are most commonly told to avoid are water damage claims and dog bite claims.

Water damage claims are not only costly, they also raise fears of future mold claims that will be even more costly. Dog bite claims are both common and expensive.

Others, however, tell a completely different story.

In "The Claim Game: A Homeowners Guide to Surviving an Insurance Catastrophe," Andrew Wallingford, an insurance adjuster with more than 13 years of experience, writes, "Your homeowners premiums will not go up because you file a claim. You will not be canceled because you file a single claim. ... Simply using your insurance when you need it is not grounds for cancellation."