Livy Howard
The notice arrived by mail. After insuring a Fairfield woman’s home since 1968, her homeowner’s policy would no longer be renewed, her carrier wrote. The reason? The home’s replacement cost could top $1 million, a threshold too high for the company.
The house was a little bungalow, “an old-lady house,” her son called it, with an assessment value nowhere near $1 million. No matter. Goodbye, after more than 50 years. She’d need to find a new carrier—fast. When she lined one up, her premium more than doubled, her son said, from $7000 a year to $18,000.
Here in lower Fairfield County, more and more homeowners are finding themselves in similar situations, says Livy Howard, partner at the independent broker Howard & Gay Insurance in Westport. Indeed, a recent study by the U.S. Senate Budget Committee ranked Fairfield County among the top 100 counties nationwide for insurance policy non-renewals.
“We’re seeing it at a much higher frequency than in the past 10 or 15 years,” says Howard. Homeowners with “high-value” residences, especially those with replacement costs of $1.5 million on up, are especially at risk.
While some insurers automatically pull the plug on policies, others require extensive home inspections by existing policy holders. One homeowner, also in Fairfield, received an email demanding a 20-point inspection, due in a month, or risk losing coverage when renewal time came around. The homeowner emailed dozens of photos of potential trouble spots as mandated in the email—under the sink, beside the boiler, at the electrical panels, and more, inside and outside, from the attic to the basement.
Several weeks later, the carrier emailed back a half-dozen photos, circled in red, singled out by the company’s AI bot as issues in need of attention. Fix them and provide evidence, the company said, or lose coverage. Fortunately, the homeowner had the means to address the issues. But some changes, like replacing a roof, installing a new water heater, upgrading the electrical system, can cost tens of thousands of dollars.
“Carriers are expecting the homeowner to protect their home,” Howard says. “They’re not just saying this is something good to have. They have data that says the risk is less if you have these things. It’s protections for everyone.”
Higher-end carriers used to inspect homes they covered every 10 years. That manpower cost money, though, and some companies got a little lax on the once-a-decade visits. In the meantime, “underwriting guidelines have gotten much more strict, and home replacement costs have soared. It’s not uncommon today for the cost to rebuild your house to be more than the market value.” Catastrophic casualty events, like fires and hurricanes, have made matters worse, Howard says, triggering billions of dollars in claims. All these factors have led to dropped policies or increased inspections.
“Carriers want to make sure all the premiums they’re collecting are higher than the claims,” says Howard. “They have to make a profit from their underwriting.”
What’s a homeowner to do? Be proactive. Says Howard, before any inspection notice arrives, ask your insurance broker what you might expect from your carrier and when. If your home’s value is rising, if you’re up for renewal after a decade or so of coverage, even if it’s simply been awhile since you scrutinized the anatomy and physiology of your home, find out now what your company could be looking at and address matters of potential concern now, while you have plenty of time to tackle trouble spots.
Whatever you do, if you get that notice, don’t ignore it. It’s much harder to get insurance from one carrier if you’ve already been dropped by another.
ALL CARRIERS ARE NOT ALIKE
Just because your current carrier plans to drop you does not mean another carrier won’t want your business. Different carriers cater to different markets. A carrier like Chubb, for example, won’t cut you off because your home is worth too much. They serve high-value, luxury homes — and expect you to stay on top of home maintenance. On the other hand, large discounters might not want your business if your home is worth too much; the claims might cost too much. By the same token, they’re often less vigilant about inspections. Says Howard, your broker can help you sort this all out.