How Hurricanes Affect Insurance

After hurricane Gustav, another worrisome bout of storms is on its way to the U.S. Tropical Storm Hannah, which already claimed 130 lives in Haiti, is headed toward the Carolina region of the East Coast. Hurricane Ike, already a fierce Category 3 hurricane, is also on its way to the Gulf region. With the U.S.’s hurricane seasons becoming more and more active, both homeowners and home insurers are getting scared. Most coastal homeowners have seen their premiums skyrocket or, even worse, some have even had their policies canceled. Many insurers are pulling out of the home insurance business altogether or significantly restricting their offerings to only inland states.

The Wake of Katrina

The ripples of Hurricane Katrina weren’t just felt by residents of New Orleans and surrounding areas. Homeowners all up and down the East Coast saw changes in their home insurance. For example, a retired couple living in Garden City, NY, 1200 miles away from where Hurricane Katrina hit, had their policy “nonrenewed,” or canceled. Their home insurance company sent them a letter saying that the hurricane events of the last two years had forced the company to reduce its exposure to similar losses in the future. The couple, who live 12 miles from the Atlantic Ocean, was able to sign with a different company, but the sudden cancellation shocked and confused them, to say the least.

The Facts

Homeowners in the Southern states have been battling rising home insurance premiums and withdrawal of services for years, but Northeasterners have only recently joined the fight. Major carriers like Allstate, Liberty Mutual, and State Farm have canceled policies in places like Louisiana and Florida in addition to New York and other Northern states that haven’t experienced a hurricane in years. As of last year, Allstate is rejecting all new homeowners insurance policies in New Jersey, Rhode Island, Maryland, Connecticut, Massachusetts, and many parts of New York. In all, about one million homeowners in the New England and Mid-Atlantic states have had their policies canceled since 2004.

For Those in Hurricane-Prone Areas

If you live in a hurricane-prone area, you need to be prepared when hurricane season begins. Here are some tips to protect yourself and your home:

• Keep emergency supplies on hand, such as canned food, water, flashlights, blankets, and first-aid kits.
• Have an evacuation plan in place for everyone in your family.
• Put storm shutters on your windows to prevent glass breakage.
• Review your home insurance coverage. Make sure you’re fully protected, that you know your deductible, and that you have flood insurance.