Insurers Canceling Homeowners' Policies in Northeast at Alarming Rates
UPDATED: February 20, 2013
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After the south was hit by several hurricanes a few years ago, insurers have been canceling homeowners' policies at alarming rates. Given the estimated $40 billion price tag on Hurricane Katrina alone, insurers obviously want to reduce their risk as much as possible. However, some homeowners in the Northeast feel that insurers are taking their precautionary measures a bit too far.
Massachusetts: Last hurricane was in 1991
Massachusetts is the perfect example of why homeowners in the Northeast are scratching their heads. The state's last hurricane was in 1991 – 16 years ago. However, many MA homeowners have recently received cancellation notices – and it's not due to making too many claims or not paying their premiums. Instead, insurers, heeding meteorologists' warnings of increased hurricanes 'in general', are simply redefining their homeowners' underwriting guidelines and either canceling policies or making the premiums so costly that insureds can no longer afford them.
One woman in Cape Cod, Massachusetts had her homeowners' policy double last year. She paid the premium for years and never made a claim. However, because she lives 'near' the water (in her case, 12 miles from it), she is subject to the increases. Being retired, she reported that she can barely afford the insurance on a fixed income. While sad, other homeowners would gladly be in her situation as they can't get ANY homeowners insurance.
States forced to step in
Many homeowners who live 'near' the water simply can't get homeowners insurance – from anyone. Many insurers are just not offering homeowners' insurance in seaside communities any longer. As such, states have been forced to become insurers to their own citizens. Massachusetts and Florida currently have large state insurance pools and the number of policyholders in New York, Connecticut and New Jersey's state pools are increasing every year – even though most of these states haven't seen a hurricane in decades.
Consumers are actually a bit more than 'annoyed' – they're downright angry. Many have been with the same company for years. Like the woman in Cape Cod, they've paid their premiums on time and have made few to no claims. Yet, they're being dropped because of a random act that may never occur – all to save a buck. And with insurance companies reporting record profits as of late, homeowners are beginning to doubt whether they really are 'in good hands'…