Homeowners insurance companies are making BIG changes to policies.
And you may not even be aware of the changes and how they affect you. Yes, insurance companies are required to send out notifications of changes, but let’s get real- how many of us take the time to read the seemingly endless memos that accompany our invoice?
So, changes are being made and we’re blissfully unaware. Until a claim happens. And that’s NOT when you want to get educated on why the claim isn’t being paid or paid the way you thought it would.
Why are these homeowners insurance changes happening?
Two words- Mother Nature. She’s been on a roll for the past few years and the industry has been smacked upside the head with wind and other weather-related claims. Just in 2012, the estimated costs of claims in Ohio from the June 29 “derecho” and a smaller, yet still violent storm two days later, are $845 million, making it the state’s third costliest disaster in recent history (https://www.ohioinsurance.org/one-year-anniversary-of-ohio-derecho-is-june-29/).
It’s virtually impossible to plan for freak weather occurrences like this. But homeowners insurance companies are trying best as they can to plan for the next one and hopefully reduce the financial impact. BUT THESE CHANGES DO AFFECT YOU. And I want you to know about them. Because I care 🙂
Here’s a list of the biggest changes I’m seeing in Ohio. If they haven’t happened in your state, just wait.
Separate deductibles for wind and hail
A big change is the introduction of separate “per peril” deductibles. Perils are the cause of a claim. For example, one of our homeowners insurance companies has introduced a “Wind/Hail” deductible, as well as an “All Other” deductible.
On my own homeowners insurance, my “Wind/Hail” deductible is $1,500. My “All Other” deductible is $1,000. So if I have a wind-related claim, I pay $1,500 toward the claim. If I have a fire, I pay $1,000.
Some companies are giving the opportunity to “buy back” the deductible to a lower amount., maybe $500. Yes, you’ll pay more premium for this lower deductible. But, that’s no different than today.
A note: I’ve seen the wind/hail deductible amount determined by the amount of coverage on your house. An example- if the home amount is less than $400,000, it’s $1,500 minimum deductible. If it’s over $400,000, it’s $2,500.
Higher minimum policy deductibles
For New policies: At least one of our homeowners insurance companies is requiring all new policies be issued with a minimum $1,000 “All Other” deductible and a $1,500 “Wind/Hail” deductible. No exceptions. A buy back option may or may not be available.
For Existing policies: Usually at renewal the company will increase the deductible to the new minimum, with an explanatory note. If a buy back option is available, the note would include the additional premium for the lower deductible.
The lesson here? If you notice your premium has DECREASED or even just stays the same, it’s probably due to a change like I’ve just described. Homeowners premiums are NOT decreasing as a general rule. So to me, that’s a red flag. You may want to contact your insurance company to see if that’s the case. And if you don’t want the higher deductible, they can explain your options.
Higher minimum deductibles for new business with a prior claim
Maybe you had a claim last year and are trying to to get quotes from a new company. I’m seeing rules that new business with one prior claim are required to have a minimum deductible of $1,500. No buy back either. Yes, you’ll see premium savings from a higher deductible (that’s always been the case), but maybe the higher deductible isn’t to your benefit. Good to know this could be an option as you research.