Maintaining Insurability

by John Savage, NACCC Certified Financial Health Counselor™️

Nowadays with the American economy in flux, companies losing profits, and expenses on everything increasing from food, to oil and gas, to rent, and property taxes, Americans do not have the same spending power they used to. Savings accounts are being depleted faster or there is no savings at all. Lack of savings puts those at risk of having to cover out of pocket costs that they cannot afford to cover should they find themselves being dropped by their insurance carrier or priced out of maintaining adequate insurance coverage.

When you are at risk of being denied insurance or having your policy cancelled on your property due to frequent storms and other high risk peril areas, there are steps you can take to insure you keep your coverage or prove insurability so you can get the coverage you need.

1. Initially, if you receive a letter or email from your insurance carrier stating that your policy premiums are going to increase, they are canceling your insurance, or you are being denied coverage, ask them to provide a detailed explanation of what your policy is being cancelled for. Request that your insurance carrier provide you with a letter detailing their reasoning and then find out what you can do to maintain coverage or obtain coverage.

   
   

2. Conduct and assess your property to see what risk you can identify. Are you too close to a flood plane? Have there been a lot of storms in your area in recent years? Are there first hazards like dead trees, high grass, unkept fields, dry unattended brush, termites, leaning trees, old broken down vehicles in the yard, exposed ponds or pools that anyone can just come or your land and go to, etc.

   
   

3. If you identify hazards or potential hazards on or near your property, there are a few steps you can take to prevent risk of injury, danger, shock, fire, etc.

   
   

   a. Make sure your property is up to code.

   
   

   b. Enhance your security on the property sch as cameras, alarms, central station security, remote phone phone security, etc.

   
   

   c. Setup a retaining wall, get storm shutters, if you have a basement, get sump-pumps to drain water in case of any flooding, etc.

   
   

4. You can also go through the Voluntary Inspection Program (VIP) to obtain a "Certificate of Insurability." You will need to hire a Home Inspector who is licensed to verify your property condition. This certificate is then presented to your current insurer or insurer of choice who then must accept the property risk as long as it is in good condition and meets the requirements for insurability.

   
   

   a. The Certificate of Insurability is good for up to 3 years as long as you make no significant changes to your property, potentially rendering it void. Any changes to your property would then require another or trigger the insurer to request another inspection be conducted by one of their inspectors to reevaluate the insurability of the property.

   
   

   b. Keep in mind, if the insurer does accept the risk of insuring your property, they could periodically require you to sign or acknowledge a written statement or affidavit stating that you have not made any significant changes to your property(s) in the 3 year period for which the 'Certificate of Insurability" or CIO, is good for.

   
   

   In order for your home to be qualified to receive the CIO, it must meet the following conditions:

   
   

   a. The property must be well maintained and unincumbered from debris, dry brush, trash, etc.

   
   

   b. Make sure your electrical systems are up to code and working properly. Make sure your electrical feature and outlets are in place covered and not exposed, this includes on the ground, around the house, in the garage, door panels, etc.

   
   

   c. Ensure there are no damaged, missing, or exposed shingles or areas of the roof.

   
   

   d. Make sure you conduct periodic checks on your HVAC systems, plumbing, systems, to insure nothing is leaking, damaged, or covered up with materials including hazardous materials such as gas or other flammable fluids, batteries, and discarded electronics, and leaking aerosol chemicals that could also pose other hazards. You will also want to make sure your systems are kept up and regularly serviced or maintained on an annual basis or as needed.

   
   

   e. Make sure your space heaters and water heaters are not covered up or blocked in anyway and that the area around them is well ventilated.

   
   

   f. Make sure any water ways including ponds, pools, lakes, hot tubs, saunas, and jacuzzies are well lit, gated, and/or fenced off to protect from little children following in and getting injured, drowning, or freezing.

   
   

   You want to make sure your property allows for ease of access in case of a fire or other emergencies to allow for first responder's ease of access to the source of an emergency. It is always good to do a walk-through of your property to ensure your property is easy to get to and access in times of emergencies and to make sure there is nothing damaged on your property.

   
   

   g. According to the Texas Department of Insurance, the 2024 fee for a VIP Inspector is $150.87 and $75.42 for a follow-up inspection for any problems or follow-up inspections for problems or risk exposures that have been corrected and needing re-evaluation.

   
   

   Lastly, if you do hire an inspector to come out to determine the insurability of the property in order to obtain a Certificate of Insurability, be prepared to also insure expenses to cover their miles for traveling to and from your home. Fees are determined based on the IRS allowable fees and for direct route to your location only.

   
   

   Bottom line is, there is always some form of risk when dealing with insurance, you have to decide what risk you need to eliminate or areas around your property you have determined could be a potential risk factor, and then take steps to eliminate or reduce the risk so you do not find yourself uninsurable or at risk of being rejected for what would have been an otherwise covered claim.

   
   

   To learn more about setting up the right coverage to insure you against loss, visit Unwind Financial Insurance Services at www.uwfinsurance.com.