Does My Auto Accident Affect My Homeowner’s Insurance?

Let’s say you had a bad year on the roads that meant you had to file an insurance claim or two. Maybe your teenage son, driving under your policy, made a bad left hand turn and sideswiped a parked car, or you skidded on an unseen patch of ice and ran into the back of a station wagon at a stop sign. Under such circumstances, our Portland auto insurance attorneys will tell you that it might be reasonable to assume your car insurance premium would go up the following year.

But should your home insurance go up as well?

According to Allstate’s new House & Home policy, which they recently rolled out in Oklahoma, that’s exactly what should happen. While it’s only in the Sooner State for now, Allstate plan to have the policy in place in several other states by 2014. The company unashamedly admits the reason they are linking driving records to home insurance premiums is to raise their bottom line.

They would like to almost quadruple their return on equity from its current level of 4 percent to a target of 13 percent by the end of 2014. Allstate have confirmed that this new policy will see homeowners paying more for their roof repairs if they have made claims on their car insurance policies.

Allstate says “Look at it this way…”

The insurance giant obviously puts a different slant on the new House & Home policy. After all, they still have to sell it, and it might not be that easy if customers decide to compare rates with other insurance providers who don’t tie driving mishaps together with higher home insurance packages.

So an Allstate spokesman tried a different approach when he said, “There’s a strong correlation between auto-loss history and the likelihood of covered homeowners’ losses. Allstate’ new…product recognizes this correlation and rewards customers with good auto-loss histories with lower homeowner rates.

A Portland auto insurance attorney would probably look at that statement and ask if that means people with no accidents will have their premiums reduced. If not, then it’s not that they’re being rewarded. It simply means that those unfortunate enough to have to put in a claim on their car insurance policy are going to get hit with a double whammy of increases in both car insurance and home insurance prices.

In fact, Allstate are very aware of the possible backlash, or at least some very tough questions, from loyal customers who are suddenly going to be asked about their driving records when applying for homeowners insurance. They’ve told their agents to explain the correlation between poor driving records and the likelihood of higher homeowners’ claims, and that a good driving record will probably mean a lower home insurance premium, by comparison with someone with a poor driving record and multiple claims, according to Allstate documents obtained by The Chicago Tribune.

And Allstate already told share holders that the reason for the new policy is to get higher returns and greater profits, not to reward good drivers with better home insurance rates. This is a pretty clear case of designing your message to suit your audience!

Is this policy legal?

According to state insurance directors and Allstate themselves, no rules exist that would prohibit an insurance company from using a person’s driving record as a reason for putting up the cost of covering their home.

However, Allstate’s customers may very well react badly to agents suddenly taking an unnatural interest in their driving history when they’re supposed to be talking about homeowner coverage. Every Portland auto insurance attorney could explain that Allstate’s interest is all about maximizing profitability and almost definitely nothing to do with rewarding good drivers with lower homeowners insurance or better coverage.

No Other Insurance Companies Are Planning to Do This

Allstate’s biggest competitor in both the home and auto insurance market is State Farm Insurance.  State Farm spokeswoman Missy Dundov says the company does not use driving records or a history of auto claims to determine homeowners pricing or eligibility. In addition, there’s no sign currently that any of the major insurance companies plan to follow Allstate’s lead in this area.

Other clauses in Allstate’s new House & Home policy could make it a tough sell, too, and that’s according to the executive director of the National Association of Professional Allstate Agents Inc., Jim Fish. He pointed out that the House & Home policy only provides replacement cost coverage for a roof that is less than 10 years old. Otherwise, the policy might pay out only the actual cash value of the roof. “If an Allstate agent is up against a carrier that pays full replacement cost on roofs, offers a reasonable deductible and doesn’t make the customers jump through hoops, he probably won’t make that sale,” Fish said.

While he said he could understand the logic that says careless drivers are more likely to be careless homeowners and therefore more likely to be putting in a claim, Fish also said he understands “consumers scratching their heads” as to why they should have to disclose information they see as totally unrelated to the price of their home insurance.

Insurance companies have historically used a number of methods to maximize profits, the three most common of which are to delay payment on all claims, deny liability in cases where they are clearly liable, and to vigorously defend cases that should have been settled long before they reached the courtroom. Allstate’s new House & Home policy seems to be introducing another means for insurers to make even greater profits under the guise of “rewarding” good drivers.

The fact is, if you have been injured in an Oregon traffic accident or your car has been badly damaged, and the insurance company is making your life difficult, you shouldn’t hesitate to contact a skillful Portland auto insurance attorney. It’s a proven fact that once a personal injury lawyer is involved, the insurance companies become far more reasonable in their negotiations, more “generous” with their settlement offers and far quicker with their responses than when dealing with a single individual.