Long Nguyen | author
As a homeowner in a hurricane-prone area, hurricane insurance is a necessity. But why do home insurance rates go up after a hurricane? There are a few reasons for this; to better understand each, we must first understand how insurance companies operate.
How Insurers Calculate Hurricane Insurance Rates
Insurance companies are in the business of calculated risk. In order to ensure that they can pay out on claims made by policyholders, they collect premiums from a large pool of customers and invest that money.
Using a variety of factors to determine premiums — including the type and age of your home, the amount of coverage you need, your claims history, credit history, etc. — insurers estimate the likelihood that you will make a claim on your policy.
The higher the risk, the higher the premium. And since hurricanes are one of the most destructive and costly natural disasters, they pose a significant risk to insurers.
Protecting the Bottom Line: Why Hurricane Claims are So Expensive for Insurers
While no one can precisely predict the severity or path of a hurricane, we do know that they have the potential to cause billions of dollars in damage. And when policyholders make claims, it can be very costly for insurers, increasing the cost of homeowners insurance.
There are a few reasons for this:
- The cost of repairs: Hurricane-force winds can damage or destroy homes, and the cost of repairs can be significant.
- The cost of rebuilding: If a home is completely destroyed, the cost of rebuilding is significantly higher than the cost of repairs.
- The cost of debris removal: After a hurricane, there is often a lot of debris — from downed trees to broken appliances — that must be removed. This can add up to a significant cost for insurers.
- The cost of medical treatment: If people are injured during a hurricane, the cost of medical treatment can be very expensive.
Brace for Impact: The Effect of Hurricanes on the Overall Insurance Market
After a major hurricane, the cost of claims can significantly impact the overall insurance market. In order to recoup their losses and protect their bottom line, insurers may raise rates for all customers in an affected area — not just those who file claims.
They may also stop offering coverage in certain areas or limit the amount of coverage they’re willing to provide. If you live in an area prone to hurricanes, it’s important to shop around for the best possible rate on hurricane insurance and be prepared for the possibility of rate increases in the future.
Do Insurers Forecast Rates Based on Hurricane Activity?
Yes, some insurers do forecast rates based on hurricane activity. They may use a variety of factors to make their predictions, including:
- Climate models — both short- and long-term
- Historical data on the amount of damage caused by hurricanes in an area
- Average repair & rebuilding costs based on current economic conditions
- The availability of hurricane insurance in an area
If the insurers predict higher costs in the coming year, they may raise rates accordingly. If the year should prove to be less active than predicted, they may lower rates.
Can an Insurer Deny My Hurricane Insurance Claim?
Yes, an insurer can deny your hurricane insurance claim. Some of the most common reasons for property insurance claim denials include:
- Insufficient or incorrect documentation: Ensure you have all the necessary documentation, including photos, receipts, and police reports.
- Excluded damage: Check your policy to see what types of damage are covered. Most policies exclude damage from flooding, so you will not be covered if your home is flooded.
- Lack of maintenance: If your home is in poor condition and this is the reason for the damage, your claim may be denied.
If you think your claim has been unfairly denied, you can appeal the decision. However, you will need the help of an experienced insurance lawyer to navigate the appeals process.
Hire a New Orleans Hurricane Insurance Attorney
If you need help with your hurricane insurance claim, contact the team at Insurance Claim HQ. We have extensive experience handling hurricane insurance claims and can help you get the compensation you deserve. Call us today at 844-587-8395 or fill out our online form to schedule a free consultation.
Homeowners Insurance Claim FAQs[faq_block]
Can I file a lawsuit for a denied homeowners insurance claim?
Yes, you can file a lawsuit for a denied homeowner’s insurance claim. However, it is important to note that most insurance policies have a clause that requires you to exhaust all other avenues before filing a lawsuit.
How much does it cost to hire an attorney?
The cost of hiring an attorney varies depending on the complexity of your case and the amount of work that needs to be done. In most cases, we work on a contingency basis, which means you don’t pay unless we win your case.
What are the first steps I should take after my claim is denied?
The first step you should take after your claim is denied is to contact an experienced insurance lawyer. They will be able to review your case and help you determine the best course of action.[/faq_block]