Homeowners Insurance – Important Update

If it seems like you are hearing a lot about insurance lately, you are not alone. The insurance industry has seen payouts skyrocket in the last few years due to fire, floods, weather, rising building costs, labor costs, and more.  According to a study by the New York Times, homeowner insurance was unprofitable in 18 states in 2023, up from 8 in 2013 despite rates rising almost 20% between 2021 and 2023. In addition, local regulations are causing some companies to leave certain areas entirely, like California, leaving payees scrambling and having to buy policies that are significantly higher than what they were paying previously.

With policies being cancelled, especially in vulnerable areas, there are some actions you can take to provide some peace of mind to your insurance company. Drone and satellite images of insured properties are being used to assess risks at renewal in some areas, so due diligence is in order.

Home Maintenance – Roof in need of repair (indicated by damage, missing shingles, moss, or staining), peeling paint or damaged siding, gutter system that has seen better days, chimneys with chipping mortar or other signs of deferred maintenance are all home maintenance challenges that insurance companies are looking for.

Trees - Falling trees and branches are notorious for causing structural damage. Trees that are dead, dying, diseased, or are simply too close to the house can be cause for an insurance company to sound the alarm. If you need an arborist, reach out.

Fire – There are several items to evaluate: Brush (such as bushes and plants) that is too close to the house, clutter (such as old building materials, firewood piles), and ingress and egress (your driveway and walkways). Deck structures are also under review in some areas as flying embers and debris can get caught underneath.

Alarm System – Having an alarm system installed that can alert authorities in the event of fire and break-ins might give you a discount on your insurance. Some systems even allow you to monitor remotely.

Surge Alerts – Some insurance companies have electrical in-home monitoring that can identify faults that can lead to electrical fires.

Since having homeowner insurance is a requirement of having a mortgage from most financial institutions, protecting against cancellation or major increases is important. Also, it is a good idea to think about the process of the buyer for your home needing to get insurance when it is time to sell. Reach out with your questions.  

 

Additional Resources:

https://www.insurancebusinessmag.com/us/news/catastrophe/homeowners-insurance-sector-slammed-by-climate-impacts-489128.aspx

https://www.financialresearch.gov/the-ofr-blog/2023/12/14/property-insurance-market/