Jeffrey Wade
If you're a high-risk homeowner, you may struggle to find insurance. However, it's not impossible. High-risk factors include living in an area prone to severe weather, in a high-crime neighbourhood, or in a home with an old plumbing, electrical or heating system. Other factors include owning an aggressive dog, running a home business, and having a low credit score. If you've been rejected by a homeowners insurance company, try a few more carriers or turn to a state-run plan, such as FAIR, which covers fire, theft, windstorms and other perils. You could also try surplus lines coverage, which offers insurance for unique properties. If you're looking for high-risk homeowners insurance, it's worth speaking to an independent licensed insurance agent, who can help connect you with carriers that specialize in this area.
| Characteristics | Values |
|---|---|
| Difficulty in getting homeowners insurance | Harder to get approved for homeowners insurance due to higher risk of property loss or claims |
| Risk factors | Location, age, and condition of the house, claims history, credit score, criminal record, owning an aggressive dog breed, running a home business, swimming pool, outdated electrical or heating systems, vacation homes, roof condition, natural disasters, high-crime areas |
| Insurance company considerations | Risk of claim being filed, type of claim, associated costs, financial background, claim history |
| High-risk insurance options | FAIR plan (state-run plan), surplus lines coverage, National Flood Insurance Program (NFIP), private flood insurance providers, specialty insurance companies (e.g., Foremost, Chubb, American Family Insurance) |
| Strategies for obtaining insurance | Cast a wide net and collect quotes from multiple providers, work with an independent agent or broker, talk to neighbors in similar situations, improve controllable risk factors |
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What You'll Learn
High-risk factors that increase the likelihood of property loss or claims
Several factors can increase the likelihood of property loss or claims, making it challenging to obtain homeowners insurance. These factors are considered high-risk by insurance providers and can impact the availability and cost of coverage. Here are some key factors that contribute to high-risk designations:
Geographical Location: The location of a property plays a significant role in risk assessment. Homes in areas prone to severe weather events, such as hurricanes, wildfires, floods, tornadoes, or storms, are considered high-risk. Natural disasters can cause extensive damage, leading to increased claims. Additionally, homes in certain ZIP codes or neighbourhoods with high crime rates or frequent natural disasters may be challenging to insure due to the increased likelihood of claims.
Condition and Age of the Home: Older homes or those in poor condition are often seen as high-risk. Older properties may have outdated electrical wiring, plumbing, or roofing that increases the risk of fire, water damage, or other issues. Homes undergoing renovations or sitting vacant for extended periods are also considered riskier as they may be more susceptible to vandalism, theft, or undetected damage.
Claims History and Credit Score: A history of multiple insurance claims can make it challenging to obtain coverage. Insurers may view frequent claims as an indicator of higher risk. Additionally, a low credit score can impact your insurance score, resulting in higher premiums or difficulty securing coverage.
Aggressive Dogs and Hazardous Features: Owning certain dog breeds with a history of aggression, such as rottweilers or pit bulls, can increase the likelihood of liability claims. Insurers may exclude coverage for these breeds or consider them a high-risk factor. Additionally, features like swimming pools significantly raise the risk factor as they increase the potential for accidents and injuries.
Business Operations and Criminal Record: Operating a home-based business, especially one with expensive equipment or frequent visitors, can increase the risk of liability claims. Insurers may consider home businesses as requiring specialised coverage. Additionally, a homeowner's criminal record can impact their insurability, particularly regarding liability and moral hazards.
High-value Homes: Needing exceptionally high coverage limits for a high-value home can make it challenging to find insurance. Standard insurance policies may not offer sufficient coverage for expensive properties, leading to higher risk assessments.
It's important to note that while some of these factors may be beyond an individual's control, there are still options for obtaining high-risk homeowners insurance. Working with independent agents, insurance brokers, or exploring specialised companies that cater to high-risk properties can help secure the necessary coverage.
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High-risk homeowners insurance companies
If you own a high-risk property, you may have been rejected by insurers or had your policy non-renewed. However, this does not mean that you cannot get covered. You can try again with a few more carriers, and there are also state-run programs and alternative providers to consider. For instance, a FAIR plan is a state-run plan that covers fire, theft, windstorms, and other perils. These policies are typically more expensive than those in the private market, and you may need to show several rejections and make upgrades to your property to qualify.
If your home is located in a high-risk area, your neighbours may have existing high-risk homeowners' insurance policies and may have tips on dealing with barriers to securing coverage. A local licensed insurance agent with experience in your area can also help connect you with carriers that specialize in high-risk homeowners' insurance.
Some insurance companies that offer coverage for high-risk homes include:
- Chubb: Chubb's Masterpiece home insurance policy is designed for high-value homes and includes perks like replacement cost coverage, extended replacement cost, and water backup.
- Nationwide
- Allstate: Allstate offers a National Flood Insurance Program flood policy and private flood insurance.
- Progressive: Progressive offers specialized HO-8 home insurance policies for older homes.
- Kin: Kin was designed for hard-to-insure homes and takes a tech-forward approach when underwriting its policies, considering things like property records, permit data, and aerial imagery.
- American Family Insurance: This company offers coverage for vacant homes and vacation homes, as well as a wide variety of policy add-ons.
- Foremost: Foremost is part of the Farmers Insurance Group and focuses on specialty homes with high liability limits. It will consider homeowners who have been rejected before, especially for low credit scores.
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What to do if you can't get homeowners insurance
If you've been rejected for homeowners insurance, it's important to understand why. Ask the insurance agent how they came to their decision, and if the reason was based on inaccurate information, ask them to reevaluate. If there is something you can fix, make the necessary changes and then ask to be reconsidered.
If your home is in an area prone to wildfires, hurricanes, flooding, or other severe weather, insurers consider you more likely to file a claim. Similarly, if your home is in a high-crime neighbourhood, it is seen as presenting a higher risk of vandalism or theft. If this is the case, you may need to turn to your state's Fair Access to Insurance Requirements (FAIR) plan. More than 30 states offer FAIR plans, which enable high-risk homeowners to get coverage. FAIR plans are typically more expensive than private insurance and may offer less coverage, but they provide insurance protection where none would otherwise exist. To see if there is a FAIR plan in your area, contact your state's insurance department.
If your home is vacant, perhaps because it is a vacation home or a house you are trying to sell, insurers may consider it a high-risk property. American Family Insurance is one of the few companies that insure vacant homes, with coverage available for three, six, or twelve months.
If your home is older, it may be more prone to problems such as leaky roofs, outdated plumbing, or wiring. In this case, you may qualify for an HO-8 policy, intended for older houses where the cost of repair may outweigh the fair market value. HO-8 insurance only covers specific perils, typically fire, theft, and vandalism, and only pays out the actual cash value of your possessions after depreciation.
If you have a dog with a history of aggression, some insurers may exclude coverage, but Foremost covers high-risk situations like pets and offers insurance to those with bad credit.
If you've filed several homeowners insurance claims in the past, your CLUE report will reflect this and insurers might raise your rates. Your credit score can also influence your insurance score, which helps determine the price you'll pay for coverage. If you have a low credit score, Foremost will consider you even if you've been rejected by other insurers.
If you have a swimming pool, a wood-burning stove, or a treehouse, an insurer may consider these fire hazards or pose a risk of injury. If this is the reason for rejection, you could consider removing these features or shopping around for an insurer that will accept the additional risk.
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How to lower your risk rating
The price of home insurance is calculated based on the risk of the insurance company having to pay out for a claim. If your home is in an area prone to severe weather, crime, or natural disasters, it is likely to be considered high risk. Similarly, if your home is vacant, has an aggressive dog, or has a history of insurance claims, it may be deemed high risk.
Location
Unfortunately, you can't change the weather patterns or move your home to a safer area. However, you can research the disaster risks in your area using free online resources like First Street or Climate Check. If you live in a high-risk area, consider taking steps to mitigate risks, such as installing wind-resistant features or a sprinkler system. You may also benefit from checking with an insurance agent or company representative to see if there are any companies interested in offering you a lower price.
Home features
Modernising your heating, plumbing, and electrical systems can reduce the risk of fire and water damage. You can usually get discounts for installing a smoke detector, burglar alarm, or deadbolt locks. Some companies offer discounts of up to 20% for installing a sophisticated sprinkler system and a fire and burglar alarm that connects to monitoring stations. Before purchasing such systems, find out what your insurer recommends and the potential savings on premiums.
Credit score
Establishing a solid credit history can reduce insurance costs. Pay your bills on time, don't take on more credit than you need, and keep your credit balances low. Check your credit record regularly and correct any errors. If you've been with an insurance company for several years, you may be eligible for a long-term policyholder discount.
Filing claims
As a rule of thumb, only file a claim if the estimated repairs are significantly higher than your insurance deductible. This will help you avoid being seen as a high-risk customer.
Dog ownership
Some insurers exclude coverage for specific breeds, such as rottweilers and pit bulls, due to their history of aggression. If you have a service animal or emotional support animal, discuss this with your agent or provider to see if a lower cost or discount is available.
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State-run programs and alternative providers
If you're struggling to get homeowners insurance through private companies, you might want to consider a Fair Access to Insurance Requirements (FAIR) Plan. FAIR plans are state-run insurance programs that provide coverage to homeowners who are unable to secure it through standard or private markets. These plans are typically used as a last resort and provide basic coverage for properties that are considered high-risk or difficult to insure due to factors such as location, age, type of construction, or claims history.
FAIR plans are available in many states, including California, Texas, and Florida, and thirty-three others, and are typically more expensive than insurance obtained in the regular market. They cover perils such as fire, theft, vandalism, riots, and windstorms, but the specific coverage varies by state. To qualify for a FAIR plan, you'll need to show that you've been turned down by multiple insurance carriers.
In addition to FAIR plans, some states have surplus lines insurance associations that can provide coverage for high-risk homeowners. These associations allow insurance companies that are not licensed within the state to issue policies, as long as they are licensed in their home state or country. Surplus lines insurers can provide more flexibility in coverage options and may be able to offer lower rates for high-risk situations.
Another option for high-risk homeowners insurance is to work with a high-risk specialty insurer. These companies specialize in providing coverage for homeowners who are considered high-risk due to factors such as location, age, or claims history. They can offer tailored solutions and dedicated support to meet the unique needs of high-risk homeowners.
Finally, there are some alternative ways to reduce your insurance premiums and mitigate the high-risk status of your home. Installing a home security system can lower your premiums, especially in high-crime areas. Implementing wind mitigation measures, such as wind-resistant features, can also earn you significant discounts, especially if you live in a coastal area. Additionally, raising your deductible can lead to lower monthly premiums, but make sure you can afford the additional expense if you need to file a claim.
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Frequently asked questions
There are several factors that can make a homeowner high-risk, including the location of the home, the condition of the home, the homeowner's financial background and claim history, and the presence of a swimming pool or an aggressive dog.
Some insurance companies that offer high-risk homeowners insurance include Chubb, Nationwide, Allstate, Progressive, Kin, American Family Insurance, and Foremost.
If you've been rejected by insurance companies, you can try contacting a few more carriers or turning to alternative options such as a FAIR plan or surplus lines coverage. Working with a licensed independent agent or insurance broker may also help you secure coverage.
