Trouble for Insurers, Trouble for Homeowners Everywhere
An increase in insurance claims resulting from natural disasters and sharp increases in the cost of servicing the claims (more expensive labor and materials) is causing broad and significant ripple effects across the insurance industry that touches homeowners across the country. Dropped or denied coverage are becoming more common over issues that never would have been a concern just a few years ago.
Homeowners insurance is a requirement for anybody getting a mortgage to purchase a home so the risk of denied or significantly higher coverage is creeping into the real estate industry as a transactional risk that didn’t previously exist. One step I’ve started taking before submitting offers for clients is gathering a history of any insurance claims on a property over the past seven years that could affect a future owner’s ability to get coverage or make that coverage more expensive.
Advice from Guest Contributer, Seth Kutner of ACO Insurance
I asked Seth Kutner of ACO Insurance, who I use personally and recommend to my clients (and to you), to provide an explanation of the most significant changes he’s seeing in homeowners insurance practices in the DMV. If you have additional questions or would like to discuss your insurance policies with Seth, you can reach him at [email protected] or (703) 732-5053.
Take it away Seth…
Over the past year, homeowners have felt increasing frustration with their homeowner’s insurance. Insurance carriers have significantly tightened their underwriting guidelines in an effort to reduce losses, which has made it harder for many people to find coverage. Two key issues are causing the most headaches: the number of claims filed and the age of roofs.
Avoid Unnecessary Calls to the Claims Department
What most people don’t realize is that simply calling the claims department—even if you're just asking a question—results in a “$0 claim” being logged. While you may not file an actual claim, this record can still impact your eligibility for coverage.
To avoid this, it’s always best to reach out to your insurance agent before you make a call to the insurance company. They can help you navigate the situation, offering guidance on whether it's worth filing a claim, and ultimately protecting you from the potential negative consequences of a recorded claim that doesn’t go through.
Consider Increasing your Deductible, Avoid Small Claims
Another trend we’re seeing is that carriers are scrutinizing the number of claims more than ever before. Given this, it may be wise to consider increasing your deductible. It’s often not worth filing small claims, those around $1,000, so raising your deductible could help save you money on your premium in the long run and discourage you from filing claims that could be costly in the long run.
Roof Age, Condition Highly Scrutinized
Roof age is becoming a significant obstacle to coverage in the DMV. While most roofs last between 30 and 40 years, carriers are becoming increasingly reluctant to insure homes with roofs older than 20 years (less in some areas), mainly due to the rising frequency of storm-related damage and the lack of proper roof maintenance. This is one of the biggest pain points for insurers today, and it's causing many homeowners to face challenges when shopping for coverage.
In today’s market, being proactive about your insurance strategy is more important than ever. By working closely with your insurance agent and considering adjustments like higher deductibles, you can protect yourself from potential surprises and keep your coverage secure.
Eli’s Closing Thoughts
In 2019, I wrote this article (15 minutes not enough for homeowners insurance) about the importance of working with a real person/professional on your insurance policy rather than using a quick online or call center process. That rings true now more than ever. What many people don’t realize is that the quick online/call center insurance approach isn’t getting you a bargain on your insurance premiums, it’s just saving you a little bit of time, but that small amount of time saved can end up being extraordinarily costly to you in the future if you have the wrong coverage during a time of need.
Take a moment to reach out to a trust insurance agent or, if you don’t have one, Seth at [email protected] or (703) 732-5053.
If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].
