https://www.wsj.com/finance/the-home-insurance-coin-flip-nearly-half-of-claims-result-in-zero-payout-4b49acaf

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The five biggest home-insurers as a group didn't pay out on more than 44% of claims resolved last year, forcing homeowners and renters to fund repairs out of their own pockets, an analysis by The Wall Street Journal found.

Several factors are driving nonpayment rates higher, according to industry analysts and executives. Prime among them: Insurers are responding to a yearslong run of postpandemic losses in their home-insurance businesses by getting tougher on claims.

One way they have done this is to raise deductibles, or the amount the customer has to pay before the insurer kicks in. Some companies applied higher deductibles to specific risks such as hurricane and hail, and changed certain deductibles from a dollar value to a percentage of the value of a home. They have also set tighter criteria for claims on expensive items like roof replacements.

Consumers hit by rising premiums are themselves selecting higher deductibles to save money, insurers and consumer advocates say. This sets consumers up for disappointment when they put in for claims.

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The first example given is a roof example where owner claimed $49k in damages and State Farm said there was only $2k in damages. Not surprising considering how much of a scam roof replacement has become. If I was an insurer, then I would be pretty militant about this particular issue as well.

Sharing chart from article showing Farmer's and USAA are the worst of the lot. They outline several reasons in the article why zero payouts are on the rise and spokesmen from the insurance companies try to explain how these payout rates are misleading. Maybe they are; maybe they aren't. Here is the funniest quote by an insurance executive basically using the Principal Skinner meme to shift blame:

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Sean Harper, chief executive of tech-based insurer Kin Insurance, said its relatively high nonpayment rate58% last year"is ironically due to some of the really customer-friendly stuff that we do."

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Proportion of claims closed with zero payouts by state is what you would imagine. It's worst in Florida, Texas, and California for all the reasons you would suspect. Added note on Texas:

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There is often a sting in the tail for homeowners who are denied a claim: It can trigger a rate increase or nonrenewal, because the customer is now seen as a higher risk.

A few states, such as Texas, bar insurers from penalizing customers for zero-payment claims. But others allow the companies free rein, according to state regulators.

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Personal story: my brother's house completely flooded in the middle of the night due to a burst pipe on a tub. He literally came downstairs about 0200 and stepped into about a foot of water. Watched waves travel across first floor as he stepped off stairs. Insurance adjuster said there was only $20k in damages. Reality was $140K. Took him about 14 months to resolve and repair due to legal fight with insurance company. Finally got them to cover about $100k so he was about $40k.

Proposition Joe said:

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We've had two different insurers drop coverage on the house we just bought due to trees near the house. Not "cut them back", but chop them down (which ain't happening).

Getting to the point where self insuring makes more sense, since they ain't paying out anyways.

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Totally agree with you. Cars, yes. Homes, I'll take my chances

I had a theft last year. I reported it honestly, with what I believed the fair market value of the stolen items. This was on a renter's policy.

The adjustor seemed to have been so shocked at my honesty and modest claim (using used eBay equipment prices for the stolen items) that he proceeded to walk me through the entire claim process, how to specify equivalent new replacement equipment (the stolen items were no longer manufactured), and in the end they awarded me the value of equivalent brand new hardware, minus 50% depreciation to reflect the age of the stolen equipment. This was fully twice what I could have bought or sold the stolen items for at eBay. He said they typically use 25% but bumped it to 50% because of how I was to work with.

I got the feeling these guys deal with a **** ton of scammers and he wanted to reward one of the few honest people that had to make a claim. My realistically $3500 worth of gear got me a $7k check, and an adjustor who seemed legitimately glad to have helped me.

What this means for the broader insurance industry, probably nothing. My anecdote isn't data. But I really wonder what type of customer they deal with on a daily basis.

flashplayer said:

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Health insurance is a scam too. For most things we have needed, the cash price is the same or actually better than the copay or patient responsibility with insurance even before you take premiums into account. It has been an eye opener.

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Assumes the doctor or practice will take cash in the first place. I had a surgery at end of last year and they wouldn't let me pay cash for it. I was in between insurance so I had to get Medishare (Christian based crowd sourcing model) in order to get the surgery done. Total insanity.

Don't get me started on this. My son had some recurring medical appts. He was in college out of state. I'm on an HDHP, so I wanted the credit toward my deductible, but I was completely paying OOP when he had the appts.

Opted to pay cash because it was just easier for everyone, and slightly cheaper (not by much - maybe $10 or $20 per appt). I submitted the claims myself to get them applied to my deductible - denied. Not by BCBS TX, but by BCBS in the state where he received treatment.

BCBS has a reciprocal agreement across states, but in the state where he was, providers who are in the BCBS network are not allowed to do this - meaning not allowed to accept cash and then have the policy holder submit the claim themselves.

The medical practitioner was a solo provider, so it was actually much better for her to let me accept the burden of filing the claims, which I was happy to do. Totally backfired. She wound up having to resubmit everything, get paid twice, and then I worked off of a credit for future visits. Total mess.

I've made 2 home insurance claims in the past 5 years. Both miraculously came in just below my deductible. One was a roof claim when Hurricane Burrell came in a couple years ago. Missing about a dozen shingles and had damaged shingles from limbs dropping on the house. Hail damage from earlier in the spring and nothing for the claim.

Worst part is they record it as a claim and justify your insurance going up because you filed it even though they paid nothing out. It should be illegal for them to deny a claim and then used the same denied claim to jack your rates up.

Ag97 said:

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I've made 2 home insurance claims in the past 5 years. Both miraculously came in just below my deductible. One was a roof claim when Hurricane Burrell came in a couple years ago. Missing about a dozen shingles and had damaged shingles from limbs dropping on the house. Hail damage from earlier in the spring and nothing for the claim.

Worst part is they record it as a claim and justify your insurance going up because you filed it even though they paid nothing out. It should be illegal for them to deny a claim and then used the same denied claim to jack your rates up.

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Are you in Texas? You supposedly can't do that in Texas.

If it's illegal, they don't deny that the claims are the reason for the ridiculous insurance price increases. They probably need to train their agents better to not admit it.

Then insurance companies will use xactimate like it's some non biased software that knows what everything should cost and what profit every contractor is supposed to make. If the contractor charges more he's stealing because xactimate (who is owned by insurance companies) says so.

My neighbor is a roofer and and helped me fight statefarm. Took about 6 months but they paid the full claim on our roof. Of course deductible is 2% now and I expect to have to fight for every claim. Get a good company that knows how to do that is my suggestion.

Tormentos said:

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Paid off house completely and rolling with the highest deductible plan I can, essentially self insuring other than catastrophic loss.

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This is the way to go. Plus liability if someone breaks their leg while visiting. Their lawyer will sue the insurance company, not you.

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Their lawyer will sue the insurance company, not you.

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They still sue you and cannot sue the insurance company directly.

Got hit by Beryl as well and had to sue State Farm. Have a court date scheduled for the end of this year, 2 1/2 years later.

MAS444 said:

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Their lawyer will sue the insurance company, not you.

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They still sue you and cannot sue the insurance company directly.

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The whole point of liability insurance is everything goes through the company. Their lawyers handle everything.

I am sure an overwhelming majority of those claims with $0 payout were either misinformed homeowners who didn't realize something wasn't covered or had a misconception of what their deductible was and the cost of the corresponding damage.

Meaning if they called their agent first for guidance a vast majority of those claims would not have been filed, nor should they have.

The Silverback said:

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I am sure an overwhelming majority of those claims with $0 payout were either misinformed homeowners who didn't realize something wasn't covered or had a misconception of what their deductible was and the cost of the corresponding damage.

Meaning if they called their agent first for guidance a vast majority of those claims would not have been filed, nor should they have.

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That's a reasonable take, but it also reinforces the idea that many people are overpaying to insure their property and aren't aware of the mistake they are making when they dole out that insurance premium payment each month when they don't even know what is included and what isn't. That's part of this whole problem, and the insurance companies make it difficult to figure out on purpose. If people were more aware of what they are purchasing, they would down-select for bare bones policies that only cover catastrophic losses.

I work in insurance, markets are starting to soften so you'll see more easing on all the changes regarding:

1. Very high wind/hail deductibles
2. Roof Payment Schedules
3. Roof valuations as actual cash value instead of replacement cost

My advice is to look at your renewal when you get it in the mail/via email. Make sure you aren't caught off guard when you go to file a claim for your roof and realize you've got a massive deductible, or only get a fraction of the replacement cost due to a roof payment schedule.

flashplayer said:

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The Silverback said:

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I am sure an overwhelming majority of those claims with $0 payout were either misinformed homeowners who didn't realize something wasn't covered or had a misconception of what their deductible was and the cost of the corresponding damage.

Meaning if they called their agent first for guidance a vast majority of those claims would not have been filed, nor should they have.

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That's a reasonable take, but it also reinforces the idea that many people are overpaying to insure their property and aren't aware of the mistake they are making when they dole out that insurance premium payment each month when they don't even know what is included and what isn't. That's part of this whole problem, and the insurance companies make it difficult to figure out on purpose. If people were more aware of what they are purchasing, they would down-select for bare bones policies that only cover catastrophic losses.

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I agree a majority of people are uninformed with their home insurance on what it covers, limitations, etc. But having a good agent is paramount who can educate, explain coverages, advise, etc......I have lost a ton of clients over the years only to come back down the road because they went for the "cheapest" route with out know what they were getting or having anyone advise them properly.