Over the past few years, homeowners in states like California and Florida received terrible news—insurers are leaving. Since natural disasters like wildfires and hurricanes have made it more expensive for insurance companies to operate, many homeowners are no longer able to get affordable insurance.
But all hope is not lost. There are ways to improve your home and, hopefully, get insurance even when you don’t feel there are many choices.
Why Are Insurers Leaving?
Many insurance companies are being driven out of states like California and Florida because of the increasing losses and intensity of natural disasters. These states are exposed to severe threats of costly events with losses in the multiple billions of dollars.
California wildfires are rampant because of drier weather and rising temperatures. Restoring homes destroyed in a fire is expensive, and insurance companies may not be able to afford it.
Florida hurricanes happen every year. The costs of repairing homes, businesses, and infrastructure are climbing. Insurance companies are setting premiums at rates that no one is able to afford. There are not enough high-paying customers, so they are not able to sustain themselves.
In cases where the risk is too great, some insurance companies limit their risk entirely by exiting high-risk states. This means fewer options and, in many cases, much higher premiums for homeowners.
What can homeowners do?
It feels upsetting to learn insurance companies are going away, but other options exist. Here are a few steps to try to find home insurance.
1. Look for State-Backed Insurance Programs
Some states have state-sponsored insurance programs to ensure homeowners aren't left without coverage when private insurers leave. Here are some examples.
The California FAIR Plan is for homeowners who don't qualify for traditional insurance. This coverage is basic, covering fire and other risks, but you may have to invest in more coverage if you want to cover more risks for the entire home.
The Florida Citizens Property Insurance Corporation provides Citizens Insurance. It is the state insurance program of last resort in Florida. It is expensive, but it does cover your home if private carriers don’t write policies for specific areas.
These programs typically cost more and offer less coverage than private insurers, so check everything carefully before you accept a policy.
2. Shop Around with Different Providers
If your current insurance company is exiting your state, don’t panic. There may be other insurers in your area. Take the time to shop around and get quotes from different companies. Remember that some big national brands might be shutting down shop, but smaller local companies might still be selling policies that are appropriate for you.
Use independent insurance agents to help with your search. Unlike captive agents, independent agents represent many insurance companies and may find a policy that works for you.
Bundle policies for a discount. If you already have auto or life insurance with one company, ask if you could save on these policies by bundling them with a homeowner’s policy.
3. Improve Your Home’s Resilience
The most cost-effective way to lower your insurance premiums is to improve your home. By improving your house’s resiliency to fire, hurricanes, and other dangers, you may become more desirable to insurers and lower your rates.
If you live in a wildfire zone, remove brush and vegetation near your home. Use fireproof materials for your roof and siding and ember-resistant vents. These modifications might decrease fire damage and possibly get you a discount on premiums.
Weatherproof your home in a hurricane zone. Upgrade your roof, buy storm-resistant windows and doors, and strap outdoor objects down if they could act like projectiles in a hurricane. Some insurance companies provide discounts for houses certified to specific safety standards, like windproofing.
4. Look into Flood Insurance
You may not realize that most home insurance doesn’t cover flood damage. In a state like Florida, floods are a real possibility. Whether you're coastal or upcountry, if your neighborhood is likely to flood, you should consider flood insurance.
The National Flood Insurance Program (NFIP) is an affordable flood insurance program for homeowners living in a floodplain. Even if you don't think you need flood insurance, it's handy to have in case your home is suddenly flooded.
5. Increase Your Deductible
You may find yourself unable to pay for insurance. Reducing your premiums by increasing your deductible is one way to save. Your deductible is how much you agree to pay out of pocket before your insurance comes into play. When you raise your deductible, you lower the cost of your policy.
If you ever have to file a claim, be sure to have a deductible that you can afford. A too-high deductible puts you in a difficult position in case of a catastrophe.
6. Consider Insurance Pools
Some states let homeowners join insurance pools or associations that cover risky properties. They pool risk among many policyholders and thus provide insurance at lower prices than you might get through an independent insurance company. See if there are such programs in your state and find out if they may be suitable for you.
Final Thoughts - Don’t Lose Hope
It is scary to see insurers leave your state, but that doesn’t mean you’re out of options. By exploring state-backed programs, improving your home’s resilience, and shopping around for appropriate coverage, you may still insure your home, hopefully without breaking the bank.
Stay informed, take action, and be prepared. With these strategies, you may find affordable insurance to help keep your home safe in the future.
Important Disclosures:
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
This article was prepared by WriterAccess.
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