4 Strategies for Showing Property Insurers Your Home is Worth the Risk

roperty insurance rates continue to rise across the board, but for high net worth homes, the marketplace is the hardest one in decades. Capacity is shrinking, and fewer carriers are willing to accept the risk of insuring high-dollar properties in catastrophe-exposed areas.

In 2022, several large carriers that insured multi-million-dollar properties declined to renew thousands of property insurance policies in California.1 In the past year in Florida, more than a half dozen property insurance companies have been placed into receivership, further compressing the already strained property market in the Sunshine State.2

Some homeowners in coastal, CAT-exposed locales such as Florida may not be able to obtain property insurance policies at all in the primary markets, forcing many homeowners to seek coverage in the excess and surplus markets. But even in the alternative markets, homeowners are seeing rate increases anywhere from 20% for lesser-exposed homes to 150% for properties with wind or wildfire exposure.3

4 strategies for securing property insurance

With the frequency and severity of weather events seemingly growing each year — and costing insurers a record $176 billion from 2020 to 20224 — homeowners need to be more proactive than ever in implementing risk reduction strategies on their properties. Those who invest the time and resources to protect their properties from natural disasters will have the best chance of securing the coverage they need. Homeowners should:

• Evaluate your property risk. Consider all areas of your home that could be exposed and consult an expert on implementing strategies to mitigate those risks. For wildfire-exposed properties, this may include installing fire suppression systems, ember-resistant venting, gutter guards, exterior sprinklers and removing trees, bushes or mulch near the home. Homes located in hurricane-prone areas may consider adding whole home generators, installing Class A hurricane glass and wind-resistant roofing systems, and fortifying openings such as skylights, entry doors and garage doors.
• Check your current property coverages. The substantial losses from Hurricane Ian may prompt some carriers to add exclusions and conditions to property policies that could leave homeowners uninsured. Review policy limits and check for exclusions. For coastal properties, ensure that any private flood policies would sufficiently cover a total loss in today’s inflationary environment.
• Make your property a more attractive risk. In addition to implementing measures to reduce CAT risk to a property, also consider add-ons that may make your property a more attractive risk to underwriters. For example, adding a water flow detector with an automatic shut-off may boost insurability. Carriers also often give credit for installing central burglar and fire alarms, temperature and gas leak sensors and security systems.
• Look for alternatives. With some carriers in the primary market exiting the property market arena and underwriters tightening up their terms and conditions, alternative markets may be the best approach. A knowledgeable broker will be able to tap into capacity in the excess and surplus markets and come up with alternatives to a traditional property policy.