2020 saw the worst wildfire season on record and faced devastating hurricanes. With estimated losses between $5.8 and $15.8 billion from hurricane damage alone, repercussions may be felt throughout the entire insurance market. Even homeowners who were not directly affected by these catastrophic events still experienced their impact through challenges placing insurance as well as higher premiums, deductibles and out-of-pocket expenses.
As more frequent and deadlier fires sweep through Western states, it’s becoming increasingly difficult to place homeowners insurance on properties surrounded by forest, reachable only by backroads, or on slopes where a wildfire is likely to run. Not only have higher premiums become the norm for these homeowners, but also policy cancellations and non-renewals. Insurance carriers also can make coverage conditional on the proper management of trees and undergrowth on the property. Some homeowners might be denied by several insurers before finding one willing to take on the risk.
What may change is insurers’ underwriting guidelines — their decisions up front about the type and location of a property that they are willing to insure, the risk mitigation practices they may require, and potential coverage terms and limitations that would limit their exposure to loss. Often we can help our clients figure out ways to reduce risk up front, making the property safer and more appealing to underwriters.
For insureds in the Midwest, a greater concern may be the direct impact of increasing hail and wind events. Deductibles in the Midwest have typically included coverage for hail and wind perils. As these perils has become more frequent and severe, insurance carriers have started including wind and hail as a separate, and much higher deductible.
Read your home insurance policy to understand exactly how hail and wind damage will be covered. If you have a wind and hail deductible, make sure it’s an amount you can comfortably cover. Unlike the set dollar amount deductible for the rest of your policy, wind and hail deductibles are usually set at a percentage (often 1-5 percent) of your home’s value.
The risk factors that you present to your homeowners’ insurance carrier can have major impacts on the premiums you pay. Risk factors increase the likelihood of a claim being filed and can include everything from the condition of your home to your financial standings. In order to save as much money as possible on your homeowners’ insurance policy, you need to not only be aware of your personal risk factors but also how to lessen the risks that the insurance carrier sees.
Homeowners should also ensure they have proper insurance protection for their homes and valuables. For example, guaranteed cost coverage is a property insurance valuation option found in some homeowners policies, which pays the full cost of replacing the home even if this amount exceeds the policy limits. This valuation method fully indemnifies the insured without any depreciation and without a maximum reconstruction payment. Read more about solutions for homeowners and the value of “replacement cost.”
As a Personal Insurance Consultant, Scott helps clients meet their personal insurance goals by thoroughly reviewing their current risk exposures and advising them on gaps in coverage.
As a Personal Insurance Consultant, Scott helps clients meet their personal insurance goals by thoroughly reviewing their current risk exposures and advising them on gaps in coverage. Once these potential short falls in coverage are identified, Scott will recommend solutions through a consultative approach, helping clients not only cover these risk exposures, but help them gain a broad understanding of what their insurance coverage can do for them. He has helped clients with personal insurance needs for 10 years, in all 50 states, and specializes in working with the complex situations of affluent clients.
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