Major home insurers are increasingly scaling back coverage options in disaster-prone areas, leaving hundreds of thousands of people without state aid originally designed to provide a temporary solution. People are moving to “last resort” insurance plans.
according to report According to an article in the Wall Street Journal, such plans are typically used by people who have no other choice in securing home insurance, but after the original insurance company terminates coverage, It is becoming the first or only option for homeowners who need to remove their property. area.
“The plan was designed as a temporary safety net,” the Journal report said. “But as the private market shrinks, the plan is becoming an insurer of first resort rather than last resort in some high-risk areas. In Florida, national property insurance last-resort plan is the state’s largest home insurance company with 1.4 million policies. ”
In other disaster-prone regions such as California and Louisiana, the number of policyholders in their respective plans of last resort has doubled in the past five years, with little sign of an imminent slowdown.
“California’s Fair Access to Insurance Requirements Plan has been accumulating policies, reaching a historic 25,000 policyholders in August, a spokesperson said, This is more than three times the monthly limit of 7,000 cases for home insurance.” farmer insurance recently imposed in the state,” the report states.
As a result, coverage is now available to those who need it, but it typically provides minimal protection at a high cost when compared to traditional mainstream coverage options that were previously available.
“These plans were really supposed to be ‘break the glass in an emergency’ type of product,” said Douglas Heller, director of insurance. Consumer Federation of America he told the Journal. “At a time when the insurance industry is moving away from communities, we need a stronger, healthier public backstop.”
By its nature, holders of insurance of last resort tend to carry higher risks. This means that these regions, which have a swollen proportion of policyholders of last resort, may need relief the next time a natural disaster occurs, especially in high-risk areas. Natural disasters are becoming increasingly common.
Consumer advocates also argue that because most of these last-resort plans are winding down, there is little incentive to “process claims efficiently,” the report said.
