Can I Be Denied Coverage if I Live in a High-Risk Area or Own an Older Home?
Every homeowner should have options for insurance coverage. But depending on the location of your home and its condition, your options may be limited.
Indeed, if you live in a high-risk area or have a high-risk home, you could be denied homeowners insurance by traditional insurers. This may not seem fair, but it boils down to one thing: money.
Insurance is based on risk, and honestly, insurance companies do not want to pay claims. When they do, they lose money. Living in a high-risk area or owning an older home increases the likelihood of damage or loss, which makes it more likely that an insurance company will refuse to cover you.
If you live in a region prone to wildfires, floods, hurricanes, or crime, insurers may view your property as higher risk and either deny coverage or charge higher premiums. Similarly, older homes may be considered riskier because of outdated wiring (like knob and tube wiring), plumbing, roofing, or structural issues that increase the likelihood of damage and claims.
If you cannot get insurance through the traditional route, all is not lost. There are a few options to consider.
Consider a FAIR Plan
Michigan and most other states offer an option called the Fair Access to Insurance Requirements (FAIR) Plan. In Michigan, it is the Michigan Basic Property Insurance Association (MBPIA). A FAIR Plan is a program designed to help high-risk homeowners secure insurance when they cannot find coverage in the standard market. Homeowners who use a FAIR Plan usually live in areas prone to natural disasters or have other risk factors that make private insurers unwilling to provide coverage.
A FAIR Plan is a shared market program supported by private insurers. Instead of one company covering your home, multiple insurers share the risk. If you file a claim, each participating company contributes to the payout.
Coverage through a FAIR Plan is limited. Most policies include only dwelling and personal property protection. Liability, medical payments, and loss of use coverage are generally not included. Homes are often insured at actual cash value rather than replacement cost, which can reduce the payout.
Because of these restrictions, FAIR Plans are considered a last-resort option. To qualify, you must show proof that several private insurers have denied your application for homeowners’ insurance.
Other Options
The FAIR Plan is often costly with limited coverage. If you want to avoid that route, consider doing the following:
- Make improvements. If your home is older and outdated, make improvements. Address any structural issues with your home, such as replacing an old roof or upgrading electrical systems, to reduce risk and improve your chances of getting approved for coverage.
- Seek a high-risk insurer. Look for companies that specialize in providing coverage for high-risk homes, which may be more flexible with their underwriting standards.
- Talk to your agent. Talk to your current insurance agent or a broker to discuss your options. Your agent may be able to help you find a viable solution.
Contact Us Today
Living in a high-risk area or owning an older home makes you more susceptible to damage or loss.
The team at Hartman Insurance Agency, Inc. can help you understand your options for insurance. Contact us today to see how we can assist you. Contact us via (734) 999-4190 or online here to schedule a consultation.