Being dropped by our home insurer.

[barkley]

We bought our first house shortly after the Northridge earthquake.

we bought our first home soon after the oakland hills fires in '91-a big factor in choosing our insurance company was watching the news coverage and seeing which companies had reps at the evacuation centers. back then we were very impressed with the ones that had people on site, verifying coverage and handwriting checks to get people into lodging.

or doesn't have a fire hydrant or a large water source capable of pumping out X amount of water

every year i hit up my insurer about offering a discount to those of us on well water that have backup generators permanently wired to them. in the event of a fire 9 times out of 10 the areas lose power so in a rural area having a generator that can power a well that firefighters can draw from is a huge safety factor. so far no success.

 

[Mackenzie Click-Mickelson]

every year i hit up my insurer about offering a discount to those of us on well water that have backup generators permanently wired to them. in the event of a fire 9 times out of 10 the areas lose power so in a rural area having a generator that can power a well that firefighters can draw from is a huge safety factor. so far no success.

Yeah well water wouldn't have worked for the insurance company I worked for, neither would a pond. It would need to be a very large and deep pond or large body of water. I forget how much water it needed to pump out but it was more than many people were capable of having. I may have seen 2 or 3 people in the 4+ years I was working there that it was notated they qualified with that large body of water. People did certainly call about it but were honestly unrealistic in the capabilities of what body of water they had could do.

It's needing a large continuous flow of water for the purposes of replacing what a fire hydrant can do.

But I can certainly understand posing the question to insurance companies, after all you won't know unless you ask. Adding a discount though would take a lot of work because they need to file that with the DOI. It would need to be worth their while in terms of how many customers could even qualify and would it actually make a difference, but I totally get where your thoughts are coming from.

 

[floridafam]

Our fire hydrant is right across the street.
We likely would never have filed a claim.

 

[Mackenzie Click-Mickelson]

Our fire hydrant is right across the street.
We likely would never have filed a claim.

no one was really questioning that it was just the evolution of the conversation into other things.

Fire hydrant within 1,000 feet is a question asked for New Business majority of the time (or if you're switching to another product), so it wasn't brought up in terms of your particular cancellation due to a company pulling out of your area.

 

[floridafam]

Yeah. I was just putting that out there. We did everything a good homeowner should do and then some.

 

[tvguy]

every year i hit up my insurer about offering a discount to those of us on well water that have backup generators permanently wired to them. in the event of a fire 9 times out of 10 the areas lose power so in a rural area having a generator that can power a well that firefighters can draw from is a huge safety factor. so far no success.

No safety factor at all. First thing firefighters do upon arrival is shutoff all utilities, so your well water supply will be limited to the capacity of your storage tank. All your generator and it's fuel supply are, is a hazard to firefighters.

 

[OneOftheB's]

The company is Federated National. I guess they are dropping about 56,000 customers.

We are also one of the 56k, and received a call from our insurance agent today. He’s already on top of getting a new policy lined up, but warned us that it will likely be a few hundred dollars more. He said Federated National’s rating dropped significantly and that lead to their decision to drop customers. Our vacation home (the one affected) is on Cape San Blas and it appears there were multiple homes in that community affected

 

[Cannot_Wait_4Disney]

We live in FL and received a cancellation notice today. We aren’t even due to renew until November. We do not live on the water and have a newer roof, impact windows and doors, etc. we did everything we were supposed to do.

We have never filed a claim and have been here nearly twenty years.

Dear loyal lifelong piggy bank that never needed our insurance but had to buy it anyway.
We regret to inform you our projections indicate that you might actually NEED the insurance you've been paying for for years in the near future. Therefore we are dropping you from our coverage. It's been great.....

Toodles.

Sincerely, your insurance company.

 

[floridafam]

Dear loyal lifelong piggy bank that never needed our insurance but had to buy it anyway.
We regret to inform you our projections indicate that you might actually NEED the insurance you've been paying for for years in the near future. Therefore we are dropping you from our coverage. It's been great.....

Toodles.

Sincerely, your insurance company.

Pretty much. I bet the CEO of the company isn’t worried about his policy being cancelled. We would have been better off putting the premiums in savings or investing.

 

[fla4fun]

Pretty much. I bet the CEO of the company isn’t worried about his policy being cancelled. We would have been better off putting the premiums in savings or investing.

That’s the way I feel about all insurance, home, car, health. Sometimes I wonder if I would have come out ahead by just saving my money and “self insuring”.

I am sorry you are going through this. Insurance here is so messed up right now and I fear it will get worse before it gets better.

 

[floridafam]

We just had a roofing inspector here to look for any damage. He said we have the best roof he’s ever seen. Not one inch of damage.

 

[floridafam]

I wonder if we can self insure after we pay the house off, to some degree. It’s almost paid off.

 

[coast2coastmickey]

That’s the way I feel about all insurance, home, car, health. Sometimes I wonder if I would have come out ahead by just saving my money and “self insuring”.

By definition, that's how self insurance is supposed to work. Look at all the possibilities of claims that can happen to you, and let's call that total $X. Most people can't afford $X, especially since we're talking unplanned/unforeseen catastrophes. That's why self insurance is out of the question, and sometimes not even an option considering that mortgagees and lienholders require insurance in most cases.

So the insurance company figures out what $X is for you, then adds additional money to pay employees, keep the lights on, service the claims, pay executives, etc. They then break that up into monthly/yearly payments so that at scale, you end up with some people with no claims for decades, a few with some claims, and some with more (who usually end up being dropped). But, there's enough money going around to take care of the occasional hurricane or windstorm or whatever, along with the usual small claims. So yeah after all that, "on average" you'll come out ahead by self insuring, because you don't have to calculate the overhead of running an insurance company.

But look at it another way, let's say you pay $3k a year for home insurance, for a $500k home. And that home burns down to the ground. And your home insurance covers $500k to rebuild, plus $250k for belongings and other parts of the claim like covering your temporary housing. Lets say in this fire example, it burned down 3 years into you owning it. You've paid $9k to the insurance company, yet just got paid $750k for your major claim. It would take 250 years for the insurance company to "break even" if we're just looking at this one customer. But since that's not how insurance works, your premiums are pooled with everyone else's hence the reason they're able to charge you only $3k per year vs $75k a year or something impractical. Most people are willing to pay the guaranteed loss (the premiums to the insurance company) to avoid the unknown loss $X described above.

If the insurance company determines there's no reliable way to increase your rates in order to maintain that balance, they'll drop you. Sucks, but Florida property insurance is struggling for many reasons, and I don't envy anyone dealing with property insurance issues in that state right now.

 

[shh]

They kinda were for insurance. We installed impact windows and doors, roof straps, new roof, etc. All to lower premium and fortify our home. And to be dropped mid year just adds to the frustration. They should honor their policy until our renewal.

that's the part that shocks me. I didn't think they could outright cancel a policy until it was up for renewal. I'm in FL too. The fact that you have a new roof is a strong point in your favor - you will likely be able to find another insurer vs going into Citizens because of that. Insurers no longer want to insure any house with a roof over 10 years old. (Crazy as the life expectancy of a asphalt shingle roof is 20-25 years and even longer for barrel tile.)

State leaders already said not to expect much in the way of relief - homeowners are basically screwed. imo, that upcoming special session is a joke. Years ago, they did something similar to the "solution" they're proposing now- only for auto insurance. They toughened rules with respect to litigation rights and fiddled with PIP and other things.

Politicians made big promises that rates would go down as a result - of course, they never did. Floridians now pay nearly the highest rates in the U.S.

 

[shh]

Some insurers are legally not for profit. I believe mine is. Whenever they turn a profit, that goes back as a dividend to the insured.

As for the OP's situation, it seems to be among a limited number of situations where policies can legally be cancelled by the insurer before renewal. The typical would be nonpayment or fraud (such as overvaluing a property's value). But it appears in this case they're in financial difficulty and can legally restructure and cancel existing policies.

Yup...it's why many national insurers set up and operate a separate "Florida" company for policies here, so they can bail if things go sideways without affecting the national company.

 

[Mackenzie Click-Mickelson]

I didn't think they could outright cancel a policy until it was up for renewal.

Unless prohibited by state law they can. When your policy is new business the insurance company has what is called a discovery period where there's more reasons they can decline you as a client. Once that discovery period passes (often the first 60 days of the policy but can vary) there are fewer reasons a cancellation can occur but they still can.

We have Progressive at the moment and we live in KS, here is what is in our policy contract:
"We may cancel this policy only for the reasons stated below by letting you know in writing of the date the cancellation takes effect. This cancellation notice may be delivered to you, or mailed to you at your mailing address shown in the Declarations. Proof of mailing will be sufficient proof of notice.
1. When you have not paid the premium, we may cancel at any time by letting you know at least 10 days before the date cancellation takes effect.
2. When this policy has been in effect for less than 60 days and is not a renewal with us, we may cancel for any reason by letting you know at least 30 days before the date cancellation takes effect.
3. When this policy has been in effect for 60 days or more, or at any time if it is a renewal with us, we may cancel: a. If there has been a material misrepresentation of fact which if known to us would have caused us not to issue the policy; or b. If the risk has changed substantially since the policy was issued. This can be done by letting you know at least 30 days before the date cancellation takes effect.
4. When this policy is written for a period of more than one year, we may cancel for any reason at anniversary by letting you know at least 30 days before the date cancellation takes effect. When this policy is canceled, the premium for the period from the date of cancellation to the expiration date will be refunded pro rata. When we cancel this policy, we will refund the return premium with the notice of cancellation or within 10 days from the date of such notice. If you cancel this policy, and the return premium is not refunded with the notice of cancellation or when this policy is returned to us, we will refund it within a reasonable time after the date cancellation takes effect.

Nonrenewal We may elect not to renew this policy. We may do so by delivering to you, or mailing to you at your mailing address shown in the Declarations, written notice at least 30 days before the expiration date of this policy. Proof of mailing will be sufficient proof of notice."

I've bolded what would be applicable given the conversation. I'm not a legal person but they would likely be covered by saying "risk has changed substantially since the policy was issued" Ergo risk to them as an insurance company in this case but in other cases the risk our property has could have changed since the policy was written. Reason #2 is the discovery period I referred to.

Now may be a good time for people to review their policy contracts

 

[bcla]

Interesting history as to why this is a problem. I guess roofing companies are trying to extract "repairs" out of insurance companies.

https://www.washingtonpost.com/opinions/2022/05/19/florida-property-insurance-special-session/​

The problem begins with unscrupulous roofers. They show up uninvited on doorsteps (one rang my doorbell last month) and offer owners a pitch: If a roof is 25 percent damaged — that’s when Florida coverage kicks in — they can wrangle you a free roof from your insurance company, even if a storm wasn’t the cause.​

​

All a homeowner needs to do is sign off on allowing contractors to collect directly from the insurance company. This allows corrupt roofers to overcharge companies for a roof that is being needlessly replaced. Roofers pocket the extra money, and homeowners get a new roof.​

​

Then, there’s runaway litigation if a claim is denied or disputed. Florida has 9 percent of the country’s property claims, but it accounts for nearly 80 percent of the nation’s property insurance lawsuits, according to the Office of Insurance Regulation.​

 

[floridafam]

We had our home inspection and have a quote for a new policy. I’m scared to open it.

 

[barkley]

No safety factor at all. First thing firefighters do upon arrival is shutoff all utilities, so your well water supply will be limited to the capacity of your storage tank. All your generator and it's fuel supply are, is a hazard to firefighters

not the case here. fire here last summer-no turn off of utilities by firefighters on any of the directly burning or adjacent properties. even if they had-my generac does not just supply power for a storage tank but runs the well pump which continues to provide fresh water so long as my generator is running (one 10 day run when windstorms took out regional electricity, and over 15 hours running constantly during the fire when we had large field sprinklers surrounding our home running at full force to provide a barrier).

 

[floridafam]

It’s not completely horrible. $2332 for the year. Up from $1496. So, over a 50% increase. And, we aren’t allowed to raise our deductible over $1,000 according to our mortgage company. We would like a $2500 deductible or higher. It’s with Edison.

I can’t wait to get our house paid off and cancel our flood insurance and change our home policy.