Insurers Flee As Acts of God Increase
With weather disasters striking more violently and more frequently, homeowners lose two ways. The first way they lose is by the destruction of their property. The second way they lose is with the unexpected loss of their homeowners insurance policies as insurance companies re-evaluate their financial liabilities.
As the damage from tornadoes and hurricanes wreak havoc over the nation, insurance companies withdraw or reduce coverage in those states most effected by Acts of God. In the aftermath of Hurricane Irene in the summer of 2011, Allstate informed almost 45,000 policyholders in North Carolina that renewal of polices were not an option unless they also had auto insurance. In the tornadoes of Alabama in the Spring of 2011, the $11 billion of property damage caused Alfa Mutual Group to announce it would not renew 73,000 property insurance policies.
In Florida, insurers have been increasingly dropping coverage since 1992, when Hurricane Andrew struck the state. Homeowner premiums are an annual average of $1,460 per home, the second highest in the United States, according to a 2010 report from the Insurance Information Institute.
For homeowners that renew their insurance policies each year, the coverage is not what it once was in years past. According to the Consumer Federation report, insurance companies have “sharply hollowed out the catastrophe coverage offered to consumers” by raising deductibles, capping replacement costs and removing coverage for wind damage if another non-covered event also occurs. For those homeowners that live in hurricane-prone areas, that includes flooding caused by storm surge.