04/17/2013 12:22 pm ET Updated Jun 17, 2013

Fire in Your House?

If you live in Florida, like me, the following bit of info might be of help when choosing a home insurance for your new digs.

A flagrant scandal has been going on for quite some time now, in Florida at least, with unaware customers risking to lose a bunch of money, and to find themselves in a deep-end hole when disaster strikes.

After paying your homeowner insurance premiums, you feel safer because you think you are protected in case of fire, hurricane, or flood hitting your property. But when time comes to cash in your insurance after a minor or major incident has happened to your home, your insurance company can tell you that, instead of paying your claim, they will simply refund your past paid premiums. How can they do that, you ask?

The reality is that some insurance companies have been using technicalities to deny claims based on customers' troubled past. The technique is called post-claim underwriting. What this mean is that the insurance company does not take a close look at your background until you actually need to make a claim. Once you do start a claim, the insurer checks your application, sometimes completed years earlier, to try to find a basis on which to deny your claim. The insurance company believes that the law states that even if you made an innocent mistake on your application, they have the right to take away your insurance coverage.

If this happens, you will be forced to pay to repair the damages yourself. This scandalous and detrimental practice is illegal, but has been applied to unaware customers, at least in Florida, for some time now.

I would double-check my homeowner insurance policy if I were you.