Allstate Insurance Co. recommends that its customers speak with their insurance agents before filing any claims on their homeowners insurance. A quote from Allstate spokeswoman Shaundra Turner in a Feb. 22 Real Estate article was unclear on this point. (Published 2/25/03)

The snow hadn't stopped falling last weekend when Allstate Insurance Co. began preparing advertisements reminding its customers that they would be in "good hands," as the company's motto states, after the blizzard.

The company announced it would send extra claims adjustors to the Northeast to deal with a likely deluge of claims, and it encouraged customers whose homes or autos were damaged to report possible claims immediately.

What Allstate did not tell its customers was that they could be penalized for filing a claim. Like many other insurance companies, Allstate looks at the size and frequency of claims filed by customers to determine how much to charge and whether to renew policies.

Although some insurance industry groups said companies make exceptions during extreme events such as the most recent winter storm, Allstate said it would not treat storm claims differently.

"A claim is a claim," said Shaundra Turner, an Allstate spokeswoman. "It doesn't matter. It's going to show up on the claim history."

Homeowners have experienced roof damage, power failures and downed trees since the snowstorm. More damage is possible this weekend as the snow melts, potentially causing flooding and other water-related problems. While water damage from such problems as storm-battered roofs is usually covered in the typical homeowners policy, most flood damage from rising water is not.

Consumer advocates are advising policyholders to talk to their insurance agents before filing a storm-related claim, particularly if the cost of the damage isn't much higher than their deductible.

"You don't want to file small claims these days," said J. Robert Hunter, director of insurance for the Consumer Federation of America. "If your roof caves in, you need to file it. But you do need to think through whether it makes sense to file small claims because of the tough market we're in."

Underwriting policies typically get more stringent during a downturn in the insurance market, which is what the industry is facing. In industry jargon, it's called a "hardening of the market," and for consumers, it means rates are going up even as coverage is going down.

Insurers have been dealing with higher claims losses and lower investment returns, which they cite as the big reasons for getting tougher on policyholders. Companies also have become more picky about which customers they want, as competition within the industry decreases.

For the past year or so, many insurance companies have begun reviewing claim history and experience to determine which policyholders to keep. Customers have complained that when they have put in as few as two claims, their insurers have refused to renew coverage.

The practice has outraged consumer advocates, and in several states regulators and lawmakers have held hearings on the issue.

"The industry is saying don't file," said Mike Schmelzer, chairman of the insurance task force of the National Association of Realtors, which has called the current state of insurance availability a crisis. "That's a little disturbing and disappointing for people who have dutifully been paying their premiums for a long time."

Insurance Services Office Inc., which provides data to insurers, has said that damage from this storm will exceed $25 million, enough to be considered catastrophic.

That could be an important trigger for the insurance industry and its customers.

Carolyn Gorman, vice president of Insurance Information Institute Inc., said insurance companies generally do not count claims filed from a catastrophic event when reviewing claim history.

"This is a very specific event," she said. "I'm sure insurance companies will see this as a catastrophe. There will certainly be claims from this, and they will be seen in a certain context."

Glenn Greenberg, a spokesman for Liberty Mutual Group, said that is exactly what his company is doing.

"With losses associated with catastrophes, we do tend to be flexible," he said. "There isn't a grid that says two claims over three years, and you're canceled. Nothing like that exists."

Allstate's Turner said the company is not trying to be unfair to its policyholders.

"We want to make sure our customers are taken care of," she said. "We are in no way saying you need not to file a claim because down the line it's going to affect you."

But if a claim is a claim?

"We want people to call their agents and go through the claim process," she said.

Icicles dangle from the eaves of a house in Silver Spring after the latest snowstorm.