Disasters Are Changing The Home Insurance Game

Disasters Are Changing The Home Insurance Game

Peak Capital Mortgage, LLC
Peak Capital Mortgage, LLC
Published on November 9, 2023

Disasters Are Changing The Home Insurance Game

Recently, homeowners have been grappling with a new challenge: the increasing difficulty of securing home insurance. This issue stems from a significant shift in the insurance industry, which is pulling out of certain markets at an alarming rate. But what's driving this exodus?

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A confluence of factors is at play. The impact of natural disasters, such as hurricanes to wildfires, has led to a spike in insurance claims. Such events have resulted in massive payouts, making some markets less lucrative for insurers. Coupled with economic fluctuations, these high claim payouts strain the financial reserves of insurance companies, pushing them to reevaluate their market strategies.

Regulatory challenges further complicate the landscape. In regions with stringent regulations, insurance companies find it hard to adjust their premiums in response to escalating risks.

The repercussions of this trend are felt deeply by homeowners. With a shrinking pool of insurance providers, many find it challenging to get their properties insured, particularly in areas deemed high-risk. This reduced competition often translates to steeper insurance premiums or settling for less-than-ideal policies.

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The housing market isn't immune to these changes either. Properties that are tough to insure can be perceived as risky investments, potentially leading to a dip in their market values. Sellers might find it harder to attract buyers for homes that come with the added burden of insurance woes.

The issue of securing homeowner's insurance is particularly acute in Colorado, where devastating wildfires have occurred recently. The risk of fires has led many major insurers to decline to renew policies for homeowners in areas along the Front Range and other fire-prone parts of the state. However, Colorado lawmakers have taken action to help homeowners find coverage. The state has set up a program called the Colorado FAIR Plan to act as an insurer of last resort for homeowners who can't find policies on the private market. Though supply is still tight, these measures aim to help responsible Colorado homeowners secure the insurance coverage they need.

As a homeowner there are other ways to help secure insurance coverage. Create defensible space - Clear brush and debris away from your home to reduce the chance of flames spreading. Having a buffer zone of at least 30 feet around the house can make it less risky to insure. Use fire-resistant building materials - Things like metal roofing, stucco siding and double-paned windows can prevent flames from penetrating the home. Install external sprinklers - Having a sprinkler system on the roof and around the perimeter of the home adds extra protection.

The best place to start is to check with your current insurance provider as to what you can do to make your home more insurable. Your local insurance agent is a valuable asset with in depth knowledge as to the current state of insurance. Now may be a great time to reach out to your agent for a review of your home coverage and what you can do to make your home more insurable.

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