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In March of this year, I touched on the changes that are affecting the insuring of high net worth homes following the recent years of natural catastrophes. That article discussed ways homeowners could reduce their risk exposures and better make the case for continuing insurability. Now, I’m focusing on how those disasters are shifting the carrier landscape – pushing traditional carriers out, narrowing options and spawning a New Normal in how policies are written with increased premiums and limitations.
First, if you’re a California homeowner with a replacement value greater than $2 million situated in a brush zone, getting home insurance coverage will be more complicated. In some cases the only option available is to place limited coverage through the California Fair plan or a non-admitted insurer such as Lloyds of London.
The California Fair plan offers a named peril policy which only provides coverage for fire, lightning, explosion and smoke up to a $1.5million in total maximum coverage. If your home’s value exceeds the $1.5million total maximum, your broker should also secure an excess home policy providing additional coverage that exceeds the maximum limit. To fill in other gaps when insuring through the Fair plan, your broker should also offer a difference in conditions policy which provides additional coverage, such as theft coverage for your personal property.
Non-admitted home insurance carriers are regulated by the state surplus lines office, are not protected by the California State’s guaranty fund, and follow less stringent requirements than admitted insurers. During a hard market, the home insurance coverage offered by non-admitted companies such as Lloyds of London are not as comprehensive as previously experienced with a high net worth insurer.
Understanding coverage differences is key. Here are some important points to consider in this narrowing coverage market:
The emerging “New Normal” in providing coverage for successful families and individuals is a climate of ongoing challenges. Lean on the experience of your trusted broker to clarify the important differences and your best options. Hopefully we are just weathering an interim season while the insurance market recalibrates and becomes more buyer friendly.
Need some help navigating the New Normal? Drop a line to me direct or connect with one of experts: email@example.com