Imagine paying your auto insurance premium for decades, but after filing claims, getting dropped by the company. It's happened to a number of people in our area and it's completely legal.
While the experience can be frustrating for some, insurance companies say it is a necessary inconvenience in some cases to protect all of their policyholders.
A string of bad luck
Sharron Moore went for years without a ticket. And years without an insurance claim.
Then she had a string of bad luck. First it was the 2009 Montgomery flood, where Moore's vehicle was flooded and a total loss.
Then during the 2011 tornado in Elmore County, a tree fell on the Saturn the family bought after the flood. But Mother Nature wasn't quite finished yet.
"A deer run out in front of me," Moore said.
And to top it all off, a collision with another vehicle, just miles from their home.
"I told her to drive my truck to work, so I could take the next morning on the way to work, she hit another car going down the highway out front here. And of course, totaled out both vehicles," said Roger Moore, Sharron's husband.
The Moores said State Farm covered all of the claims. But after that fourth accident, State Farm dropped coverage on all of the family's vehicles, despite them being loyal customers for decades.
"I mean we pay our premiums every month." Roger Moore said. "And I thought that was the purpose of paying the premiums was to take care of the things that were unforeseen. That's the whole purpose of insurance."
As unfair as it might sound to some, insurance companies are within their rights to drop customers at any time.
"There's no set standard a driver or an insurance company has to meet before they get terminated," said Julian McPhillips, with McPhillips Shinbaum in Montgomery. "It's completely within the discretion of the insurance company. So long as they pay any outstanding claim."
State Farm Responds
In a statement issued to WSFA 12 News, State Farm Spokesman Roszell Gadsen said the insurer does not comment on issues involving individual policyholders for privacy reasons. He went on to say:
"…we can tell you decisions to non-renew are never made lightly because we absolutely value the relationships we have with our policyholders. Every policy has its own unique circumstance and is reviewed on a case-by-case basis; sometimes we have to make these very difficult decisions so we can help keep rates affordable for all of our State Farm customers. When reviewing policies, we consider factors such as tenure, type of policy, claim activity and history; that sometimes means we have to make the tough decision to part company with a long-term policyholder."
Good news, bad news
Attorney Aaron Luck deals with these cases all of the time, and said he warns his clients they could be dropped.
"If they think you're a risk or at risk, they're obviously far more likely to cancel your insurance or to increase the rates so much to the point where you have no point but to leave," said Luck, who is also with McPhillips Shinbaum.
The good news is auto insurance is such a competitive business, it shouldn't take long for another company to pick you up. That's what happened for the Moores.
"Of course, we're having to pay more for insurance now. I've done a lot of price checking," Sharron Moore said. "And could not find insurance as cheap as what we were paying at that time."
Moore did say the cost of their coverage has declined, the longer they have stayed with their new insurance company.
"I am very thankful we were able to find new insurance, " Sharron Moore said. "I'm just thankful that with the damage that was done to our vehicles, and everything, I'm still driving the one vehicle we had the tornado damage to."
What you need to do
Luck said there are things people should keep in mind when finding a new insurance company.
"First and foremost, where you're applying for new insurance, tell the truth," he said. "One of the first questions they're going to ask you is have you made a claim in 'x' number of years." You don't ever want to get caught or misrepresent anything that they need to know…because in the end what will happen is they will deny the coverage based upon a misrepresentation of the policy."
Luck also recommends getting adequate insurance for vehicles, and making sure you have uninsured motorist coverage.
Attorneys say concerns about increased premiums should not dissuade you from filing a claim on which you deserve to collect.
Meanwhile, the state Department of Insurance says you do have the right in most cases to appeal the decision of dropped coverage with the company. If you feel you have been wrongly dropped, the department will investigate, but they are limited in how much they force an insurer to keep providing you with coverage. They can be reached at 334-241-4141.
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