What Holmes Murphy Experts are Seeing in This Year’s Renewal Documents
By: Madelyn Newland, Holmes Murphy Client Executive, Private Risk Team
It’s that time of year. You know, it’s the time when you receive a large envelope from your insurance company with your renewal documents.
Do you look at the documents? Have you heard from or talked with your agent about what the documents reveal? Better yet, is this the year to shop around for new and/or different insurance in the market?
When you do get that envelope, here’s my suggestion: Take the time to review everything inside it. The renewal packets are the place where you will find a treasure trove of information, including added exclusions, higher deductibles, or a note that your insurance company will actually no longer be insuring you. Scary and frustrating, right?!
Well, those are just a few of the items we’re seeing in the marketplace today. Here are some other big items that may impact you:
Separate wind and hail deductibles
Insurance companies are adding percentage deductibles for any wind or hail losses. For example: If your home is insured for $1,000,000, then the insurance companies are requiring a 1% ($10,000) deductible. In fact, we are seeing insurance companies require 2% or even 5% in states such as Texas, Colorado, and Nebraska.
Roof payment schedule requirements
Insurance companies are requiring their policies to carry “actual cash value” for their roof settlements. This means if your roof is 10+ years old, you may get close to nothing for turning in a claim for your roof. This can come as a big shock when you are looking at replacing your roof due to a hailstorm. One important item is to confirm that the roof year on your policy is accurate. We often see that insurance companies pay for new roofs, but then forget to notify underwriting to update the policy!
Exiting the market
Many insurance companies have decided they are no longer going to be insuring personal homes and autos. This has caused a strain on the rest of the markets to pick up the insureds that are being dumped by their current insurance companies.
Sticker shock
Insurance companies are increasing rates significantly. There have been more convective storms in the Midwest than we have ever seen before. The hurricanes that have hit the Gulf Coast have cost more than any previous hurricanes. All of these catastrophic events are causing insurance companies to be unprofitable. In order to stay in business, they have to increase their rates.
New business restrictions
Many insurance companies are restricting their new business and underwriting strategies. This can mean they are halting all new business in certain states, or they are requiring a completely clean account in order to work with a new client. This would mean no home and auto losses in the prior 5 years.
Cost of construction
The cost of construction has skyrocketed since 2020. Is your home insured for the correct replacement cost? We suggest not only working with your agent to conduct a replacement cost estimator, but also making sure that you have an extra cushion built into your policy in case the replacement cost is not enough in the event of a total loss. Guaranteed replacement cost is always the preferred home replacement agreement we suggest.
Large liability losses
The hot topic with a majority of our insurance companies today are the large judgements from jury trials that are dipping into the umbrella coverages of our clients. They are seeing claims that are exceeding clients’ umbrellas. The insurance companies suggest carrying an umbrella that is equal to your current net worth.
In the end, here’s my advice. Stay on top of your personal home, auto, and umbrella insurance to prevent a headache from occurring after a loss. AND, review, review, review. Renewal documents aren’t necessarily light reading material; however, they are important. The last thing you want is a surprise.
Any advice, comments, direction, statements, or suggestions contained herein is provided for your information only and is not intended as, nor does it constitute, legal advice. Neither Holmes Murphy, or any of its subsidiaries or affiliates, represent or warrant, express or implied, that such statements are accurate or complete. Nothing contained herein shall be construed as or constitute a legal opinion. You have the right to, and should, seek the advice of legal counsel at your own expense.
