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What should I do if I have an open claim on my renters insurance but want to buy a new house?

Question:
I have an open claim on my renters insurance policy. I am going to be closing on a new house soon but our insurance company has denied me homeowners insurance, as has another company. What should we do?

Steve, Ohio

Answer:
Dear Steve,

Mary Bonelli, a spokesperson for the Ohio Insurance Institute, says that unless the claim hinges on an arson or fraud investigation, or you've brought in a public adjuster, your having an open claim and not being able to buy new homeowners insurance aren't connected.

However, if there is the possibility of arson or if you've brought in a public adjuster, insurance companies will balk at insuring you because of the potential problems each presents. If you're suspected of arson, there's the chance that it could happen again; and if you're using a public adjuster, an insurance company could see you as a "difficult" policyholder. Not that either is necessarily true, but that's simply how insurance companies might see it.

There are several steps you can take. Shopping around is always is a good idea, and you might even find an insurer that will charge you less than the company that issued your renters coverage. Part of your shopping might also include checking with an independent insurance agent; you can find one either in the Yellow Pages or on the Independent Insurance Agents of America's Web site.

Second, check with your mortgage holder. It might be willing to insure your home.

As a final option, look into Ohio's FAIR Plan, the state's insurer of last resort. A policy through the FAIR Plan will be more expensive than a policy through a private, but if you've shopped around and come up empty, it will cover you. For more information, see Which states have a FAIR Plan?

Lindsay Baer, a spokesperson for the Ohio Department of Insurance, adds the suggestion that you call the department's consumer services division at (800) 686-1526. The department will be able to tell you if there's something rotten going on.

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Disclaimer: We are journalists, not financial planners or insurance brokers. Nothing we say should be interpreted as a recommendation to buy or sell any insurance product, or to provide other financial or legal advice.

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