What the heck is going on with insurance rates? BUYER BEWARE!

By: Denise Koslowsky

Insurance rates continue their historic rise and we have been thrown into muddy waters – forced to share devastating news with existing clients and prospects each day.


As an insurance agency that prides ourselves on educating each client we serve, we have done all we can to be extremely transparent with the reasons that rates are on the rise. Read more here.


Recently a conversation we’ve had to repeat all too often is that the dream home a client has just purchased may be uninsurable or insurance may only be available with non-admitted Excess & Surplus carriers and exorbitantly costly. If standard insurance is available, it will not be inexpensive.


We have arrived at a divide where the consumer will need to decide if they are willing and able to pay for quality insurance. If not, they need to understand that the middle market options (if available) do not offer the same coverage, do not pay claims at the same pay scale as carriers that specialize in writing high-value homes, and they put the burden on the consumer to properly insure to value, which leaves huge coverage gaps in their insurance coverage at the time of a claim.


Buyer Beware. Purchasing Insurance For Your New Home May Not Be As Easy As You Think

The underwriting changes are coming so rapidly that we as agents are being caught off guard because every day brings a new eligibility guideline. Not to mention the fact that the rates we are presenting have caused some shock and confusion to the consumer. If buying a home in a  coastal area, the age of the home matters. New homes are properly elevated and built to withstand hurricane-force winds. In the eyes of the insurance carriers, retrofitted older homes are not equal to the quality of new home construction.


That is why now, it is more important than ever before that you conduct due diligence before signing a contract to purchase a home (unless there is no mortgage and a willingness to self-insure.)


We are not recommending that one self-insure, however, obtaining well-priced home insurance is extremely challenging in the following situations:

  • Coastal locations
  • Below elevated location
  • Homes with prior losses
  • Homes in flood-prone areas
  • Homes within 10-mile of a body of water
  • Older homes
  • homes in need of some kind of remediation
  • In coastal areas, homes that are not windstorm and hurricane compliant
  • Home in states where the insurance market has essentially collapsed such as Florida and California.


In such instances, if you can find an insurer willing to write it, the choice is generally a policy through an Excess and Surplus lines carrier. You can read more here.


As a mother, the comparison I will draw is that immediate first phone call you make upon giving birth to your first child to your parents. When you are thinking about buying a house in this day and age, call your insurance agent before anyone else. Let us help you navigate these muddy waters.  For example, if the house has suffered losses, it might be uninsurable.  Or if the house is located in a flood zone, your options will be very limited.


Understanding A Hard Market

The insurance market is experiencing what is referred to as a “hard market”. It means that rates are increasing, and coverage is harder to find because companies are restricting the insurance products they offer. Hard markets are cyclical, and there is no predicting how long they will last. Find out more here!


With the temperature of the ocean water rising, and climate change disasters coming fast and furiously each day, the insurance companies and their reinsurers are bracing themselves for a major disaster in the Hampton’s, Long Islands Gold Coast, and East Coast shore areas.  At the same time, consumer spending on home purchases in these same areas has not slowed down.


As an agent, we feel terrible bursting our client’s bubble of excitement upon going into contract on their dream home. In addition, every day brings terrible news of cancellations for long-time claims-free clients in Florida.


This doesn’t mean there are no options available, but capacity is extremely limited for very specific risks, which is why we implore our clients new and old to call us to discuss their plans.  Our expertise is an advantage! We understand that if the house in the Hampton’s was built after 2003 when building codes were changed in Suffolk County, placing insurance is much more viable. We know that in Florida, construction needs to be post 2002, and if a waterfront location, ex-wind coverage in high-rise buildings is a common solution in lieu of paying excessive insurance premiums since the building itself will have wind coverage, but not the interior Additions & Alterations owned by the unit owners.


The good news?

We have wonderful insurance carrier partners and access to most Excess and Surplus solutions, and we want to help you enjoy that dream house! No one enjoys these unavoidable insurance rate increases. We always strive to recommend coverage that truly has your best interest at heart so that in the event of a loss, you won’t be left without adequate coverage. If you have any questions please get in touch with us at 914-723-7100.


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