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What if I can't get coverage?
If you live in a
home that is considered "high-risk" or plan to move to a high-risk
location, you may have difficulty obtaining an insurance policy.
What constitutes high-risk?
- Your home is located in an area
prone to severe weather such as hurricanes, windstorms, tornadoes or
hail.
- You live in an urban area with high
crime, vandalism and theft.
- Your home has an old plumbing,
electrical and/or heating system—these represent a higher chance of
causing fire or water damage.
If one or two insurers turn you down, don’t despair. You do have other
options. If you are buying a new home, ask the real estate agent,
mortgage lender or builder for names of companies that write in your
area. If it’s an existing home, ask the previous owners who insured the
house. If you still can’t find coverage, consider the following:
Ask for help from your current
insurance professional.
Talk to the agent or company representative that previously insured
your home or is currently insuring your car, boat or business. If the
problem is not where the house is located, but the condition that it is
in, find out what type of improvements or disaster-resistant features
would be needed to make your home more insurable. The Institute for
Business & Home Safety (IBHS) also provides information on natural
hazards, community land use and ways you can protect your property from
damage. It can be reached at http://www.ibhs.org
Talk to your neighbors and find out
which insurers they use.
Get the names of any agents who may be knowledgeable about the specific
risks in your neighborhood.
Call your state insurance department.
It can generally provide you with a list of insurers that write in your
area. It might also have information regarding community groups that
help homeowners with insurance problems such as the Neighborhood
Reinvestment Corporation.
If you still can’t get insurance, find
out if your state has a special insurance plan known as shared market.
Generally, two types of plans exist:
1. FAIR Plans
Fair Access to Insurance Requirements (FAIR) Plans were created in the
1960s to make insurance available in areas that had abnormally high
exposure to risks over which they had no control. These plans are
insurance pools that sell property insurance to people who can’t get
coverage in the voluntary market.
FAIR Plan policies may cost more than private insurance and may offer
less coverage, but they offer insurance protection where none would
otherwise exist. All FAIR Plans cover losses due to fire, vandalism,
riot and windstorm. About a dozen states have some form of a standard
homeowners policy, which includes liability. In California, the Plan
covers brush fires. Georgia and New York provide wind and hail coverage
for certain coastal communities.
In order to qualify for FAIR Plan coverage, you must:
- Make improvements that limit the
risk of fire, theft or water damage, such as upgrading your electrical
wiring, heating or plumbing systems, repairing your roof or improving
security.
- If you do not correct conditions
that make your home prone to losses, the FAIR Plan administrator has
the right to deny insurance coverage.
2. Beach and Windstorm Plans
In seven Atlantic and Gulf states, there is a counterpart to the FAIR
Plans called Beach and Windstorm Plans. They provide residents and
business owners, in designated areas, with coverage against hurricanes
and other severe windstorms.
Windstorm Plans in Florida, Mississippi, South Carolina and Texas offer
coverage only against wind and hail damage. Plans in Alabama and North
Carolina offer coverage for fire as well. In New York, the Coastal
Market Assistance Plan helps homeowners get coverage if their
application has been rejected by at least three private insurers.
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