policy protects what is probably your biggest investment. However, in recent years, the risk exposure of US insurers has increased amid increased frequency of catastrophic events, population migration to high-risk regions and inflated reconstruction costs.
As a result, insurers have more carefully managed their exposure and the potential for financial loss by taking action, including raising premiums and terminating some home insurance policies.
What is home insurance risk management?
Exposure management is “the practice of identifying and analyzing loss exposures and taking steps to minimize the financial impact of the risks they impose,” according to International Institute for Risk Management (IRMI).
You may receive a letter from your insurer stating that your policy is not up for renewal due to exposure management. This means that they will not continue your coverage because it is no longer profitable to do so.
Florida, in particular, is seeing an increase in non-renewals due to inclement weather and increased instances of contract scams and litigation. For these reasons, insurers are practicing exposure management by raising premiums and denying coverage to some residents there, says Ken Gregg, CEO of Orion180an independent agent-serving home insurance provider in the Southeastern United States.
According to a report from Insurance Information Institute (III). Since the 1980s, average insured losses from natural disasters have increased by almost 700%, the report says.
The III attributes the recent surge largely to more people moving into at-risk areas. As the population of these regions increases, insurers face an increased risk of larger and more frequent claims that could exceed their ability to pay, leading to rate increases and non-renewals of policies.
Why hasn’t my home insurance policy been renewed?
The non-renewal of your policy is ultimately up to your insurer who manages its exposure. Your provider has most likely determined that you and your home are overly responsible.
Here are some specific reasons why your home insurer may have chosen not to renew your policy:
- Claims history: If you have too many claims on your file, your insurer may refuse to renew your coverage. For example, if you have two fire-related claims, you might see a 60% premium increase. After the third claim, your insurer may choose not to drop you due to the risk of you making another claim, depending on Assurance.com.
- Location: Insurers may determine eligibility for coverage based on where you live. For example, before California’s wildfire insurance law, many homeowners saw it as non-renewals due to increased fire damage.
- Dangerous house: If an inspection determines that your home is unsafe due to potential fire hazards and a weak structure, your insurer may refuse to renew your policy unless you address these issues.
- Roof problems: An older roof could put you at risk of non-renewal of the policy. Typical roof life expectancy is about 30 years, according to Insurance.com. However, insurers may not reinstate your coverage if your roof is over 20 years old. Many will give the policyholder a notice of non-renewal. The notice gives homeowners time to fix the roof issue before their policy expires, according to Steve Rivera, personal lines practice leader at The Liberty Company Insurance Brokers.
- Pets: If you adopted a pet during your coverage that insurance companies typically blacklist, you may be at risk of non-renewal because large, aggressive breeds present liability risk.
- Bad credit: In some states, insurance companies use insurance-based credit to determine your likelihood of filing a claim. Although denial of coverage is a low possibility in this case, you may see higher rates.
7 ways to get home insurance after non-renewal
It can be frustrating to be denied your policy. However, you have certain rights as a policyholder that your insurer must respect.
Depending on your state, your insurer must give you a certain number of days’ notice and explain the reason for non-renewal before filing you. Contact your provider’s consumer affairs division or your state’s insurance regulator if you believe your policy is wrongfully terminated.
Insuring your home is essential to protect you from financial difficulties. Here are seven steps you can take to get coverage after a non-renewal.
Step 1: Speak to an independent agent
While your insurer should give the reason for non-renewal in written notice, speaking with an insurance agent might give you more clarity. An independent agent could help you understand any changes in exposure and what to do to move forward, according to Jason Bataille, growth division chief at Global insurance.
“A knowledgeable agent with appropriate geographically specific carriers would normally be able to provide you with options and limit the inconvenience of reduced coverage or increased price,” says Bataille.
Step 2: Make efforts to mitigate your risk
If your insurer chooses not to renew you due to a failed inspection, be sure to address these issues and take steps to protect your home from damage.
You may also consider purchasing additional coverage to protect your investments, such as flood insurance or earthquake insurance. Having extra blankets is especially important if you live in a high-risk area.
Step 3: Gather and compare home insurance quotes
The III recommends getting quotes from at least three different companies. Consider asking friends and family for recommendations. You can also contact your state insurance regulator to provide you with complaint rates and ratios from major insurers.
To compare quotes, know what goes into each policy’s coverage to make the best apples-to-apples comparison. A standard home insurance policy will include housing, personal effects, liability protection and coverage for additional living expenses. Make sure any additional coverage you want is included in your quote.
Step 4: Look for discounts
If you’re a high-risk homeowner, getting cheaper rates from other insurance companies may be more difficult. Taking advantage of discounts is key to lowering your premiums. Although discounts are most likely automatically applied to your quote, speak with your insurance agent about lesser-known discounts you may be entitled to.
Here are some of the most common home insurance discounts:
- Multi-policy discounts: Receive a discount by combining your home insurance policy with another insurance product, usually car insurance.
- Home Security Discounts: You may qualify for a discount if you have installed devices such as burglar alarms or smoke detectors.
- Wind Attenuation Discounts: Fortifying your home’s structure and roof against wind-related damage can qualify you for wind mitigation discounts, says Gregg. This is especially important in Florida, where hurricanes are frequent and devastating.
Step 5: Research company reliability
To ensure you get the best value, look for the reliability of an insurance provider. An insurer’s financial strength, assessed by independent agencies, can help you determine if it can pay a claim when you need it. AM Best assigns insurance companies letter grades from A+ to F. Providers rated below “B” are considered financially unstable and unable to pay claims reliably.
You can also check the reliability of a company by looking at customer satisfaction. JD Power Home Insurance Customer Satisfaction Survey ranks the major insurance companies on a scale of 1,000 points.
Step 6: Finalize and purchase your policy
Once you’ve selected the right policy, make sure all of your information is correct before signing. Note that your insurance company may require a home inspection to ensure your application’s replacement cost coverage and property information is accurate.
You also want to know how you will pay your insurance premiums. You usually pay your insurance premiums to your home insurance provider or mortgage lender. You will pay your premiums in full or recurring installments through your home insurance company. If you have a mortgage lender, you may have to pay premiums with your monthly mortgage payment through an escrow account.
Step 7: Consider your state-sponsored insurance program
If it is difficult to obtain coverage from a private insurer, consider consulting your state’s Fair Access to Insurance Requirements (FAIR) plan if it has one. The FAIR plan is a state-sponsored program that provides coverage for high-risk homeowners.
These plans are usually found in states at high risk of natural disasters such as wildfires and hurricanes. It generally offers less coverage than a standard home insurance policy. However, that might be your only option for coverage, according to Rivera.
“Buying insurance after a non-renewal can be a tedious exercise due to the number of providers available,” says Rivera. “Using a broker is a huge boost for policyholders looking for a wide range of options in the market.”