A Neighbor Hit My House With Her Car 5 Years Ago. My Insurance Paid the Claim and Dropped Me. My Finances Still Haven't Recovered

Buying a home right before prices took off and mortgage rates climbed sounds like fortunate timing.

One Rhode Island homeowner did exactly that at the start of the COVID-19 pandemic, locking in a 3% interest rate and a mortgage payment of about $1,550 a month.

Then their neighbor did something unimaginable. “Unfortunately one day, I get home from work and see a car in my front yard with the rear axle ripped off and my front entrance destroyed,” the homeowner recently shared on Reddit. “The lady across the street backed into my house.” Although the insurance covered the repairs, the homeowner says the accident is still costing them hundreds of dollars every month five years later.

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One Claim Changed Everything Because the house needed immediate repairs, the homeowner filed a claim with their own insurer.

Their insurance company paid for the damage and then sought reimbursement from the driver’s auto insurer through subrogation.

The poster said the driver’s insurer ultimately reimbursed the homeowners’ insurance company.

But the claim remained part of the homeowner’s insurance history.

Their insurer later dropped them, and they were placed on force-placed insurance, which was nearly twice as expensive and added about $150 a month to their mortgage payment.

Shopping around didn’t provide much relief.

The homeowner said insurers didn’t like the recent claim or the force-placed coverage.

Location was another problem.

They were told that many companies wouldn’t offer coverage because areas close to Rhode Island’s coast were considered a flood risk.

Eventually, the homeowner found another policy, but it cost even more, adding roughly another $100 a month.

Then the escrow account that covers insurance and property taxes had to catch up with the higher costs.

Trending: Looking For An Alternative To A High-Yield Savings Account? See How Some Accredited Investors Are Using Short-Term Real Estate Notes. “Needless to say my mortgage payments are now $2035/month up $500 from just a few years ago,” the homeowner wrote. “And it’ll be like this for a while.” Current insurance quotes are reportedly running around $3,500 to $4,000 a year.

The home’s appreciation since 2019 is also contributing to the higher cost.

Other Homeowners Had Similar Stories The story attracted plenty of stories from people who said claims had followed them for years. “You have to buy it but don’t you dare use it,” one person said.

Another described insurance as “the only industry where you hire a company to one day be your enemy.” Another commenter said they filed a homeowners claim for less than $2,000 in storm damage after paying premiums for six years. “They dropped me a month later,” the commenter wrote, adding that the claim then made finding another insurer extremely difficult.

Others said they had seen rates rise even when they weren’t responsible for what happened.

One person said their car insurance increased about 200% after someone hit them while they were stationary in a parking lot, despite being found not at fault.

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A self-described licensed commercial property and casualty insurance broker offered one possible explanation for the homeowner’s trouble.

They said the original claim could still be listed as “open” if the insurer hasn’t completed the subrogation process.

They suggested requesting “currently valued loss-runs” to see the claim’s status and then working with an independent insurance agency to shop for coverage.

For homeowners who do find themselves shopping around after a big increase, Lemonade Insurance offers homeowners insurance designed to make getting and switching coverage simpler.

Its policies are accepted by all major mortgage lenders and can be paid through escrow or directly.

Lemonade can also handle canceling an old policy and managing escrow payments during a switch.

Coverage can include rebuilding costs after covered damage, additional living expenses if a home becomes unlivable, replacement of stolen belongings and certain liability and medical costs.

Give America’s most loved homeowners insurance a try.

For this homeowner, the bigger problem is that housing costs didn’t rise in isolation. “I could manage that maybe, if everything else wasn’t going up in price too,” they wrote. “I’m basically barely floating on the surface here trying to not go underwater.” Image: Shutterstock Read Next: Think Your IRA Is Limited To Stocks? Many Eligible Investors Are Exploring Alternative Assets Instead.

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