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Dear Tripped:
Hold on! -- let's take this one step at a time! First of all, insurance is intended to cover sudden, unforeseen losses – not those caused by lack of maintenance. Your crumbling step must have been deteriorating for a long time before it finally gave way, so the damage could have been prevented by proper maintenance.
Secondly, you don't build up an insurance “credit” over the years, as this is not how your premiums are used.
Insurance is a contract for a fixed period – usually one year – to pay if you suffer an insured loss during that time. Your insurance premiums go into a pool that insurers draw from to pay the claims of the unlucky policyholders who have suffered a loss. You have been fortunate enough not to have had a claim all these years, so that puts you with the majority (insurers hope!) of lucky people who didn't need to use those funds.
However, your premiums have been used, to some extent, by the less-fortunate minority who DID have claims.
But let's say your luck turns – you do have a major claim, and your insurance company has to dip into the pool to pay you. Does that mean your insurance is then reduced by the amount of the pay-out? Fortunately, that is not the case, which is a huge relief to those who have major claims. For example, let's say your house is insured for $100,000. A fire destroys 75 per cent of its value, or $75,000. That does not mean that your insurance for the remainder of the contract period is reduced by $75,000 to only $25,000. Rather, it stays at $100,000.
In other words, the insurance company puts the policy back to the way it was without charging you any more money for the period that the insurance is in effect. All in all, a pretty fair deal.
So while your premiums don't build up for your use, neither is your insurance depleted if you do have a claim. Now you have a fix on how insurance works. And speaking of fixing, how about those steps!
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