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1. 'We have our own caste system'

Sam Mayer, a physician in suburban Chicago, had insured his home, car and life with Metropolitan Life Insurance for 10 years without ever filing a claim, until a damaged roof and a burglary led to two claims totaling $3,000. Mayer promptly installed a home-security system. But instead of giving him a discount, the company dropped Mayer from its preferred coverage, citing his "claims history" and instead offered him its standard carrier at a higher rate -- even though his risk profile hadn't really changed.

("Homeowners insurers may sometimes offer a change in conditions of coverage of a consumer's policy at renewal in order to continue to offer a policy to that individual whose risk profile has increased," a MetLife spokesperson says. "This often occurs when a customer files more claims than average in a short period of time.")

Indeed, almost all insurance companies slot their policies into different categories, based on a variety of factors, including your credit scores and the location of your home. But even if your risk profile doesn't change in any substantial way, you might still be shifted from a company's preferred carrier to its more expensive counterpart, says Jim Davis, a retired public-information director of the Texas Department of Insurance.

"If you're not in the preferred carrier, ask why," urges Davis. Your agent -- or even the insurance company itself -- may be able to move you into a more favorable slot. Also, it's worth shopping around. A home that may be considered "high risk" for a small regional carrier could actually be deemed "preferred" by a bigger outfit such as State Farm.

2. 'Anything out of the ordinary makes us really nervous.'

Everyone knows that if your home is near the water or in an earthquake-prone area, insurers will shun you. Regulators can't do much about that. But some insurers use illegal underwriting guidelines to redline -- the industry term for "discriminate against" -- certain groups or locations.

For example, agents say they often get memos identifying undesirable ZIP codes or reminding them to stay away from couples who are having problems in their marriages. Bob Hunter, the director of insurance for the Consumer Federation of America, describes his "favorite" memo from a company advising its agents: "Before writing a policy, drop by the house after work hours and see if the owner is sitting on his porch in a T-shirt and drinking beer."

If you think you've been discriminated against, raise a fuss -- as did an elderly woman who was purchasing a home with a companion. She was denied coverage due to "an additional nonrelative listed as the named insured," even though all other information was acceptable under company guidelines, according to the agent's report. The woman contacted an attorney and the American Civil Liberties Union. The response: The insurance company said it had made an error and immediately offered coverage.

3. 'One wrong move and we'll drop you . . . '

As insurance companies tighten their belts, they're getting to be even more particular about whom they'll cover and whom they won't. You could potentially file just one claim and get tossed out; indeed, you may not have to file a claim at all to have your coverage terminated. And once you've been dropped, very few insurers will want to touch you.

"Insurance companies are cold and hard," says independent agent Michael Grace of Baton Rouge, La. "They believe that if you get hit once, you'll probably get hit again."

That's what Mike Martin discovered after his Labrador took a nip at an appliance repairman and Martin's insurance company paid out a claim. When his policy came up for renewal, he was shocked to learn that he was being dropped. Martin, a financial planner, says he spent the next couple of weeks frantically calling up insurance agents to get a new policy. But since dog bites are a red flag for insurers, he was frozen out.

Alarmed by his lack of coverage, the company holding his mortgage forced Martin to join a special "insurance pool," which cost five times more than his original policy. It wasn't until he filed a complaint with the Maryland Insurance Administration that he got his original policy reinstated.

"I've seen people being discarded by their insurers for reasons much less ominous than a dog bite," the consumer federation's Hunter says. Some will drop you if you start an at-home business, while others will label you too risky if you've missed a credit-card payment or two.

4. ' . . . especially now that Big Brother is watching'

Privacy isn't so easy to hang on to in the information age. When it comes to home insurance, companies now have access to their own version of a credit report -- and it reveals all sorts of information about you, sometimes even past behavioral patterns. The most pervasive source of information is called the CLUE report, short for Comprehensive Loss Underwriting Exchange, which enables insurers to check the claims history of both the homeowner and the property being purchased in order to assess the risk of loss.

Insurers contend that they need such services to weed out dishonest customers who attempt to hide their claims histories. But the problem is that, even when you've had legitimate claims in the past, you're guilty until proven innocent, says Linda Ruthardt, a former commissioner of insurance for Massachusetts. Once a person has been branded a high-risk applicant and rejected by one insurer, others are not likely to provide coverage.

5. 'We're more secretive than the CIA.'

Here's a little test: Call your insurer and ask how many claims it would take for the company to drop you or deem you "risky." Chances are you won't get much of an answer. Even if your insurer has written guidelines, it's under no obligation to share them with you. And when an insurer doesn't have written guidelines, its decisions can border on the arbitrary.

"It could take some middle manager glancing at the company's loss records to decide that the cutoff should be lowered from three claims to two claims," says Ron Sundermann, a retired insurance agent in Cedar Rapids, Iowa. And agents won't get a bulletin to notify them of the change, so they have no way of advising a client on whether to swallow the cost of a $1,000 roof damage or pass it along to the insurance company and be penalized for it.

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Sundermann learned the hard way: Over three years, a customer with a stellar record filed four small, legitimate claims totaling less than $5,000 and was dropped by his insurance company. When Sundermann pleaded his customer's case, he was reminded that it was the frequency of his customer's losses, not the severity, that made all the difference. The lesson? Filing one big claim may well land you in less trouble than four small ones -- all the more reason to get a large deductible and pay for the smaller claims out of your own pocket.

6. 'You're paying too much for your policy'

When it comes to your home, the last thing you want is to be underinsured. But could you actually be overinsured? It happens a lot, regulators contend. And when it does, it's often the mortgage lender's fault. For instance, a bank may require that your insurance cover almost the entire value of your home, including the land -- which doesn't make a lot of sense, because land doesn't burn down -- when what you really want to cover is just the house.

If you're like most homeowners, your policy's rate gets raised every so often to account for inflation. But read the numbers carefully: Your rates may be quite a bit higher than the actual inflated value of your home. Insurers also inspect homes every so often to check on any additions. But that doesn't mean they get the last word -- Jim Davis' insurer jacked his premium way up after inspecting his house. But by challenging the inspector, Davis brought down the home's valuation by several thousand dollars.

"They were factoring in an uncovered porch area," scoffs the retired Texas insurance official. "That's an open space, not an area that would need replacing."

If you think your rates are higher than they should be, ask your insurance agent to come out and assess the home and try to come up with a more reasonable number, the consumer federation's Hunter says. Also, if you know the square footage of the house, speak with a builder and ask what it would cost to rebuild a home like yours -- that's the amount that should be used to determine your insurance premiums.

7. 'You're probably covered for a lot less than you think'

Rick and Anne Morrissey were sitting in the living room of their Indian Hills, Colo., home one day when they heard a tremendous crash in the backyard. Rushing outside, Anne was shocked to see that two giant elk had come through and demolished their children's swing set. They were even more shocked when their Allstate adjuster called and told them that damage by animals isn't covered by most insurance.

That's only one of the many surprises you might discover in the fine print on your policy.

That's also why, after Hurricane Katrina, even homeowners with flood insurance found that the personal belongings they'd lost in the storm weren't covered. Thomas Martin, the founder of national advocacy group America's Watchdog, lost $300,000 in possessions when a nearby levee broke and everything on the first floor of his home -- including jewelry, computers and flat-screen TVs -- was destroyed by "a toxic soup of sewage and oils." Had he known to take out the Federal Emergency Management Agency's supplemental-contents coverage in addition to his flood policy, Martin says, some of his destroyed valuables would have been covered.

Among the most commonly misunderstood parts of any policy are the ways it handles missing objects, says David Thompson, an independent agent in Vero Beach, Fla. If you drop a piece of jewelry down the drain, for example, it's generally not covered, but if you leave it by the sink in a public place and it's not there when you return, most policies will treat the loss as a theft and reimburse you for the loss.

8. 'We like some of our agents -- and their customers -- better than others'

Insurance companies will tell you that any authorized agent is a good agent. But, in truth, they play favorites, giving preferential treatment to those who generate the most business, have customers with the fewest claims, or both. And they offer them elite status: State Farm, for instance, includes its preferred agents in the President's Club.

Why should you care? Because buying through one of these favored agents can pay big dividends to consumers. The chosen few tend to have increased flexibility on pricing and, more importantly, greater leeway on underwriting guidelines. For instance, American International Group used to insure boats that traveled only 50 mph or less. But when Baton Rouge, La., star agent Michael Grace took on a client with a speedboat, he persuaded his company to underwrite it.

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The special treatment applies to claims as well. Says Sean Mooney, the chief economist at Guy Carpenter & Co., which advises insurance companies about risk: "When a claims situation comes up, (a preferred agent means) you have a friend in your court."

Other advantages preferred agents enjoy: They may have an easier time retaining someone who has had claims and would otherwise be canceled, and they can often get their clients moved from a company's standard carrier to its preferred one.

9. 'We're biased against older homes'

You have your eyes set on a beautiful period home built in the 1940s, with original slate roofs and fluted ceilings that look like they're right out of Architectural Digest. It sounds lovely; now try getting insurance. Insurers are increasingly clamping down on "mature" homes, even when they're only 30 or 40 years old.

"In Texas, a 1953 house is considered ancient," says Yvonne Darrah, who called at least 10 insurance companies before she could find one that would insure her 32-year-old Austin, Texas, home at a reasonable rate. "We were desperate," she says.

Even if you do get insurance for your older home, you may not get the best kind. Some companies won't sell "guaranteed replacement cost" policies -- coverage that will pay whatever it takes to restore your home exactly as it was -- in neighborhoods where property values are declining or where the property is old. You could end up with coverage that's limited to only a few risks. Or you might be offered "cash value" coverage -- these policies will cover only the cost of replacing what's damaged, minus depreciation.

"If you had a kitchen that was built 20 years ago and it's destroyed, the cash value is no help," says Mary Griffin, former insurance counsel at Consumers Union.

10. 'You need to check up on us -- and it's easy'

Insurers may not be the most forthcoming companies in the world, but, thankfully, you can find out a lot about them. You can find ratings reports from agencies such as A.M. Best, Moody's and Standard & Poor's at your local library or online.

You might be surprised at what you can get from your state's insurance department as well. Texas and Missouri, for example, have websites with information on the latest rates in different areas and tips on how to file a complaint. If nothing else, a phone call to the state will let you know what other consumers think of your insurance company.

"We can't recommend agents or companies, but we can certainly tell you the number of complaints filed this year," says a spokesperson for the Nevada Division of Insurance.

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