How to Cope When You Lose Your Homeowners Insurance

 

            You’ve been doing the right thing, paying your premiums on time and out of the blue you get a letter from your insurance company that your coverage is being dropped. It has nothing to do with you — maybe the carrier has decided it wants to reduce its exposure to hurricanes, tornadoes, floods or fires, or it could be that they have had too many losses because of natural disasters. Perhaps you recently filed a large claim. Whatever the case, you’re out of luck.

            What can you do?

            “Property insurance companies can choose to discontinue or non renew at the end of the contractual period for any reason that isn’t illegal or prohibited by law,” explains Frank Darras, an attorney specializing in insurance.   ”It’s a thankless process and a slap in the face to premium paying policyholders,” he adds.

            Darras says the surprise letter in the mail is very familiar with Katrina, Ike, the tornadoes in the Midwest, the spate of natural disasters in recent times across the country.  State legislatures have been very proactive in passing new legislation and in states like New York, an insurer can’t non renew more than 4 percent of its policies in a given year, says Darras. Other states hit hard by hurricanes have passed similar legislation to limit the pullout and stiffen fines and consequences when a carrier takes the premium dollars and runs.

            As long as the insurance company gives you notice within a certain amount of time, usually 30, 45, or 60 days depending on state law, legally there’s nothing you can do, says Bill Mills, vice president of SIA Group, a full-service insurance company.

            A carrier must meet very strict time warning deadlines or the non-renewal is ineffective, adds Darras.

             Find another company

             “There are generally other options available, although most people really dislike the hassle of dealing with it and the time involved. My advice is try not to take it personally,” says Celia Santana, president, Personal Risk Management Solutions.

            Once the notice arrives be a smart and savvy shopper. Check with your state department of insurance for the insurer of last resort if your carrier is non renewing. That coverage may be more expensive, but at least you will not be left in the cold.

            You also want to call on an independent broker/agent who works with multiple insurance companies. “If one carrier is dropping people, there are several others who aren’t,” says Mills, who works with several carriers.

            You can ask your chamber of commerce for local carriers, as well as going on websites of companies like www.travelers.com or www.thehartford.com,  choosing find an agent and entering your zip code or address, adds Mills.

             Look for the best deals

             Realize too, that just because there may be only a few carriers remaining doesn’t mean you have to overpay to get coverage, says Darras. “Compare all the features, advantages and benefits of the companies proposed side by side so you can compare apples to apples and know what you’re buying and how to use the policy if disaster strikes,” says Darras.

            Don’t forget to ask your neighbors and nearby family and friends who are happy with their insurance companies what they are paying for their coverage.

            To get the best rate, always ask about multiple policy discounts. You’ll also likely qualify for a better rate if you have good credit scores.

            “In this economy, check your limits against the property’s current market value as you may be overpaying,” adds Darras.

            You can also decide to raise the deductible to save money on premiums.

            It might take work, and surely it will be inconvenient, but you’ll survive. Says Mills, “It’s good to have a relationship with an independent agency that has access to multiple carriers.” Like with investing, you don’t want all your eggs in one basket.

           

 

 

 

Comments