The insurer released this statement because many policyholders feel it should work like a bank account.
State Farm has issued a reminder to homeowners insurance policyholders to help them to keep in mind that a policy is not the same as a bank account, so the premiums being paid are not an amount that is being amassed so that it will be guaranteed to be available later on.
The statement was made in response to many policyholders’ shock when it didn’t function as a savings account.
This has become quite a problem for both State Farm and its homeowners insurance customers. Customers who have been paying premiums for decades have found that after having made multiple claims, their policies were not being renewed by the insurer – a practice that is not limited to this one insurer, but that is common throughout the industry.
Unfortunately, paying premiums over time on a homeowners insurance policy doesn’t guarantee future coverage.
According to a representative from State Farm, “It’s a common misconception that somehow your insurance policy in any way, shape or form resembles a savings or bank account.” She did point out that terminating a homeowners insurance policy is never an easy decision for the insurer.
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The recommendation that the representative made for home insurance customers was to check with their agents on an annual basis and discuss whether or not coverage needs to be altered based on changing needs over time. She requested that policyholders “Understand we do this to remain competitive and provide insurance that’s affordable to all of our existing customers.”
Many homeowners insurance policyholders don’t realize that making a number of claims on a policy puts them at risk of having their coverage terminated. State Farm is hopeful that by clarifying this part of the process, it will help to spread awareness regarding the nature of the coverage, so that other consumers can have their misconceptions about their policies corrected.
Both customers who had misunderstood their homeowners insurance policies and insurers are hoping that they can share these stories to prevent them from recurring. The better the understanding is among both insurers and their customers, the easier the situation will be on everyone.