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Home Insurance Is Becoming Higher Risk to Insurance Companies

Higher Risk Home Insurance

The insurance industry, perhaps more than any other industry, constantly analyzes trends in the marketplace and it is the main driver behind all decisions they make. Colorado and Oklahoma are the only 2 states to have an annualized growth in average homeowners claim payment of over 10% while 5 states, Tennessee, Alabama, Kansas, Ohio and New Jersey all have between an 8-9.99% growth in average home claim payments. Still worth noting, 19 states have a 5-7% growth in average home insurance claims and they are Montana, Wyoming, South Dakota, Arizona, New Mexico, Missouri, Arkansas, Illinois, Indiana, Kentucky, Georgia, South Carolina, New York, Massachusetts, Connecticut, Pennsylvania, Nevada, Maryland and West Virginia. The volatility of the average homeowners insurance claim of greater than .94 are Nevada, North Dakota, Louisiana, Mississippi and Virginia. There are 8 states with a volatility index of .7 to .939 and they are California, Arizona, Texas, Nebraska, Iowa, Minnesota, Florida and Maine. Entire states are now considered high risk homeowners states due to the increases.

This is the data that actuaries need to do their job which is to tell insurance companies how much they should charge people for homeowners insurance policies. Generally speaking, they will single out large areas but sometimes even smaller areas down to zip codes to offer only higher rates and deductibles as they deem those areas to have high risk homeowners insurance customers. Conversely, other areas that have little in the way of frequency and severity get to enjoy lower rates and deductibles. If high risk home insurance continues at this pace we can anticipate a steady increase in the high risk homeowners market. Being labeled as a high risk homeowners insurance policyholder, millions of Americans have to struggle through the difficulties of what to do after being dropped by their carriers. If you have high risk car insurance you have only one person to blame and it's yourself but with homeowners claims, millions of Americans are trying to find ways to work with the system to meet their needs for something that they often have no control over. Most people look to their states FAIR Plan for answers only to find that their state does not have a FAIR Plan or that the plan they have states on the website that they are the “insurer of last resort” due to the lack of replacement cost policies and lower limits allowed. For the right experienced agent, solving their high risk home insurance issue is no problem at all.

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