Jittery Insurers Back Out of Hurricane Insurance Coverage, Consumers Suffer
Homeowners across the country and especially in the Gulf Coast region can look forward to a long and tough hurricane season. The reason? Homeowners are finding it harder to hold on to their hurricane insurance policies.
Insurers across the U.S. are raising premiums and dropping coverage to limit their exposure to risks. As a result, homeowners are finding that insurance is not only more expensive, but also more difficult to get. According to the Insurance Information Institute, homeowner policy premiums have risen by 3 percent across the country. The increase is even greater in the Gulf Coast region where the impact of hurricanes tends to be maximized.
- Last year, state Farm Insurance Company and AllState Corp raised premiums in Texas, blaming a high number of hurricane insurance claims as the result of Gustav and Ike, for the increase.
- llinois-based AllState has also raised deductibles and stopped offering coverage in some coastal areas.
- State Farm Florida could soon pull out of the Florida market because it was denied its request for a 47 percent rate increase.
- According to the Insurance Information Institute, insurers have seen record losses in Texas, Louisiana, Mississippi, and Florida over the past five years. In these areas, premiums have risen sharply.
The National Oceanic and Atmospheric Administration has forecast between 9 and 15 named storms in 2009, including between 4 and 7 hurricanes. Of these hurricanes, between 1 and 3 will likely be major. However, forecasters are also predicting fewer hurricanes than last year. That should be good news for homeowners in hurricane-prone areas.
Insurers Backing out of Hurricane Coverage
Insurers are blaming devastating financial losses from powerful hurricanes over the past five years, as well as the current turmoil in the financial markets, for impacting their earnings. Companies use financial investments as an additional source of income to fall back on when they have huge claims to pay out. Most of the major insurers have reported huge losses due to a decline investment income.
For worried homeowners it does not really matter why an insurer would back out of an agreement. With insurers getting antsy about paying claims, and large numbers of Ike lawsuits still pending in the courts, we can expect more people to need insurance attorneys once November comes and the season ends.
We have had nationwide homeowner's Ins. for eight years on the same home, with zero claims. This year they raised our premium over 100%.(From $1,557 to $3,993) Nationwide said because of our distance from a fire department they changed the protection class from 3 to 10. We have been the same distance from the fire department for eight years.
Saint Johns County Florida