Homeowners Deductibles

[shonceman]

Folks, I'm a life agent member of this forum. So I'm not up to speed on P & C, and my question is about my own homeowners coverage. I've had coverage with the same carrier for 10 years. I've stuck with them because of the way they took care of a couple of claims for me in the early years of the policy. Not anxious to change. But the original reason I went with them is that they used a flat dollar amount deductible across the board. Other carriers were applying a 1-2% windstorm deductible. Now my carrier has changed to offer only a percentage deductible of 1 or 2% regardless of peril. My agent says all carriers are now doing that. Is she correct? (I should mention that I live in Texas.)

 

[RFMaurone]

I cannot speak to carriers the wright in Texas but I can tell you here in Pennsylvania not all the carriers are doing

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[///MJay]

Not doing that in Ohio either. Most carriers have it as an option but not a requirement.

 

[jwoodworth]

State by state decision even with in the National Carriers. Very common in Colorado for both personal and commercial property carriers. State Farm is has been doing it for a couple years now. you can take the option of .5% if you maintain the autos with the same carrier. Farmers does a split deductible as well. Think Hail and Fire Damage. I can tell you the advantage to the client is come renewal time you are not as impacted as a homeowner with a flat all perils deductible. In Texas? P&C carriers took a BATH in the last few years due to fires and mold. They are tightening up their underwriting rules and non renewing everywhere. As well, third party inspectors are being utilized to verify structure quality etc. A lot of homes are vacation homes in Texas, Arizona, and Colorado causing occupancy and therefore monitoring an issue. The days of $500 deducts are quickly becoming a thing of the past in some of the higher risk and higher value homes.

 

[insurance1822]

I'm sure not ALL carriers are doing that now...but I wouldn't be surprised if that's the trend. It sounds like you're with captive agent who has no other options OR a lazy independent.

Call a local independent agency & let them quote your insurance w/ multiple carriers. Maybe the ones offering $1000 deductibles are so much extra it doesn't make sense? Independent agents are your answer.

 

[Texasproducer]

Your current agent is 99% correct. I am an independent agent in Dallas And out of my 20 or so carriers I have 2 that will still do a flat deductible. ASI and American Modern. Everyone else is at least minimum 1% for Wind/Hail.

Honestly it comes down to a cost analysis to see what makes sense. Figure out how much extra you are paying for a flat deductible and compare it to how often you file claims. More than likely the percentage deductible will be financially beneficial over the long term.

 

[HolySdrJr]

I agree with Texaproducer, though I'll add liberty mutual to his list. If you live far enough from the coast...

 

[shonceman]

Thanks, everybody. I get that Texas carriers have been hit hard in recent years, so some things have to change. But the reason I went with this carrier to begin with was because they didn't impose a % deductible for wind/hail, like all other carriers I checked. At the time I knew I couldn't handle a $2k hit if there was a storm. Then, sure enough, in '08 we had a massive hail storm & I had to replace the roof. This carrier (ok, it's Farm Bureau) handled the claim expediently & professionally. And because I had a flat deductible, I could afford to have the work done by a reputable roofing company. My neighbor actually had been laid off just before this, and started doing roofing as a result of this storm. He was "working with" people with higher deductibles, which you and I know means he was lying to insurance companies about what he was charging. I wasn't willing to do that. And I've been willing to pay a little more in premiums at times because of this experience. I do get it, though, that in order to be sort of competitive, FB might have to make some adjustments. It's just not ringing true for me that all carriers are going to a % deductible on all perils, not just wind/hail. However, I'm also reluctant to change because within the year before the hailstorm I'd had 3 auto claims and a personal property theft claim. The storm brought another auto claim and the roof claim. I've heard plenty of stories about carriers canceling an insured for far less, and I was sure they would cancel me! But they didn't even change my rates (although I lost my claims-free discount)! So, I feel they've earned my loyalty, but I still might check around a bit.

 

[jwoodworth]

I'm sure not ALL carriers are doing that now...but I wouldn't be surprised if that's the trend. It sounds like you're with captive agent who has no other options OR a lazy independent.

Call a local independent agency & let them quote your insurance w/ multiple carriers. Maybe the ones offering $1000 deductibles are so much extra it doesn't make sense? Independent agents are your answer.

Never said ALL but I can tell it a trend in higher risk areas. I was a Captive but now independent.( and never lazy) Have worked with both in Colorado and various other states in the Southwest and Midwest. While a lot of the captive carriers are staying and offering the % deductibles a lot of companies are just non renewing or pulling out of the market all together. I agree that shopping is great. An educated customer has always been my best customer. Unfortunately, I have never represented the cheapest companies and will not cut coverage for the sake of a sale to beat a price of someone else. Never a truer statement is "You get what you pay for" than in insurance. And I had a 92% retention rate with an average of 35% increase in premium on fire policies due to the higher risk and loss ratios. The customer stayed because they understood what they were paying for and the quality of the policy.

 

[agentinsouth]

They are correct, most major carriers have gone to a % in Texas since that huge hail storm hit Dallas 2 years ago. It was so big, a few carriers lost a letter from A.M.Best. Also, Most good p&c agents watch their loss ration, even if the carrier offers a flat, I shoot for a % on wind/hail. I personally think we could go back to flat deductibles if all the major carriers agreed to only sell ACV roofs for storm damage.