High Risk Home Insurance and Insurance of Last Resort

Coastal states face unique and severe weather patterns that can cause tremendous damage, which can cause significant losses and make them a high risk for home insurance coverage. The damage after Hurricane Katrina cost more than $40 billion for 1.7 million U.S. policyholders in six states, leaving home insurance companies scrambling to recover. Many homeowners in that region have seen severe increases in home insurance policy premiums and a rise in cancelled policies, forcing some homeowners to settle for high risk home insurance. States have been forced to require carriers to offer high risk home insurance policies to make sure that homeowners in the coastal regions can get their property insured.

TIP: Any high risk home insurance policy should be considered last resort. Make sure you thoroughly shop around before you settle for a high risk policy.

To ensure continued economic growth in their territories, states need to assure that there is some type of home insurance coverage available. State plans have morphed from being a provider of insurance to those with no access to a home insurance policy to becoming the major providers of insurance in high risk coastal areas. As state plans emerge to take on the more risky policies, private insurers have moved to limit the number of policies they have in threatened areas. With a decrease in private plans, a state funded high risk home insurance policy may be all you can find if you live in a storm threatened area.

A Case Study: High Risk Home Insurance in Florida

Florida is the state most vulnerable to coastal storms. It has 27% of all hurricane exposed property in the U.S. and is expected to gain almost thirteen million new residents by 2030 according to the U.S. Census Bureau. Coastal exposure in Florida is estimated at more than $2 trillion (New York–primarily Long Island– has almost as much exposure, but the probability of a major hurricane hitting its properties is much lower).

Florida also operates one of the largest coastal state sponsored high risk insurance programs. Citizens Property Insurance Corp. started in 2002 with the idea that it would cover only those who could not find coverage elsewhere and would ultimately shrink and perhaps disappear as the need for it declined. But as Mother Nature intervened, the realities of the market required private companies to increase their premiums, cancel home insurance policies or move out of state. State politicians reacted by allowing Floridians to opt for coverage by Citizens Insurance if their private insurance coverage would be significantly higher. This would also offer homeowners guaranteed rate stability for several years.

Getting High Risk Home Insurance from an Insurer of Last Resort

If you find yourself in a situation where a private insurance company will not insure you, contact your state-run high risk home insurance plan. Whether it is due to your home being in a coastal region or your claim history makes you too much of a risk for a private home insurance company, opting for an insurer of last resort will at the least get you covered.

TIP: If you have questions about purchasing insurance of last resort in your state, click here to ask an experienced insurance professional for assistance.

Regardless of what state you live in, you should shop for home insurance prior to agreeing to any last resort plan. Last resort insurance can be expensive, so take your time and be sure you need to go down that path. Click here to get a free home insurance quote before you pursue last resort insurance.

The insurers of last resort for the 16 coastal states are:

Florida: Citizens Property Insurance Corp.
https://www.citizensfla.com/

Texas: Texas Windstorm Insurance Association
https://www.twia.org/

Massachusetts: Massachusetts Property Insurance Underwriting Association
https://www.mpiua.com/

North Carolina: North Carolina Joint Underwriters Association

North Carolina Insurance Underwriting Association
https://www.ncjua-nciua.org/

South Carolina: South Carolina Wind and Hail Underwriting Association
https://www.scwind.com/

New Jersey: Citizens Property Insurance Corp. 866-411-2742 (866-411-CPIC)
https://www.state.nj.us/hurricane/insquestions.html

New York: New York Property Insurance Underwriting Association
https://www.nypiua.com/

Virginia: Virginia FAIR Plan
https://www.vpia.com

Georgia: Georgia Underwriting Association
https://www.georgiaunderwriting.com/

Louisiana: Louisiana Citizens Property Insurance Corporation
https://www.lacitizens.com/

Maryland: Maryland Joint Insurance Association
https://www.mdjia.org/

Delaware: Insurance Placement Facility of Delaware
https://www.defairplan.com/

Alabama: Alabama Insurance Underwriting Association
https://www.alabamabeachpool.org/ Insurance Placement Facility of Delaware

Connecticut: Connecticut FAIR Plan
https://www.ctfairplan.com/

Rhode Island: Rhode Island Joint Reinsurance
https://www.rijra.com/

Mississippi: Mississippi Windstorm Underwriting Association
https://www.msplans.com/mwua/

Mississippi Residential Property Insurance Underwriting Association
https://www.msplans.com/MRPIUA/about_us.shtml

Case Studies: High Risk Home Insurance and Insurance of Last Resort

Case Study 1: High Risk Home Insurance in Oceanville, Florida

Oceanville, a small coastal town in Florida, is particularly vulnerable to hurricanes and tropical storms. After Hurricane Stormbreaker caused widespread damage, homeowners in Oceanville faced difficulties finding affordable home insurance coverage from private insurers.

Private insurers either increased premiums substantially or refused to provide coverage altogether due to the high-risk nature of the area. As a result, many Oceanville homeowners turned to Citizens Property Insurance Corp., the state-sponsored high-risk insurance program. While the premiums were higher than average, it provided the necessary coverage to protect their properties against future storm damage.

Case Study 2: Insurance of Last Resort in Seaside City, Texas

Seaside City, located on the Gulf Coast of Texas, experiences frequent severe weather conditions, including hurricanes and powerful storms. Ms. Johnson, a resident of Seaside City, had a history of prior claims due to storm damage on her property. As a result, private insurance companies were hesitant to provide coverage, considering her property a high-risk liability.

Frustrated and worried about leaving her property uninsured, Ms. Johnson contacted the Texas Windstorm Insurance Association (TWIA), the state’s insurer of last resort. TWIA offered her a high-risk home insurance policy, although the premiums were considerably higher compared to standard coverage. With TWIA, Ms. Johnson had peace of mind knowing her property was protected, even in the face of severe weather events.

Case Study 3: Coastal Coverage in Cape Harbor, Massachusetts

Cape Harbor, a picturesque coastal town in Massachusetts, is prone to storms and high wind conditions. Mr. Thompson, a homeowner in Cape Harbor, struggled to find adequate home insurance coverage due to the area’s high-risk nature. Private insurers were reluctant to provide coverage, and the few options available had exorbitant premiums.

Faced with limited choices, Mr. Thompson contacted the Massachusetts Property Insurance Underwriting Association (MPIUA), the state’s insurer of last resort. MPIUA offered him a high-risk home insurance policy that covered the specific risks associated with coastal living.

While the premiums were higher than average, it provided Mr. Thompson with the necessary coverage to protect his property against storm damage and other coastal perils.