Even the savviest insurance professional can face challenges when dealing with their client’s hard-to-place risks.
The housing market is no exception and many brokers are finding that homes are falling outside of the standard insurance market appetite due to a number of unique exposures. As a result, these homes are qualified as hard-to-place and brokers are left wondering where to turn. In these situations, clients become frustrated and may ultimately contemplate self-insuring.
“When faced with the challenge of a hard-to-place home, it is essential that brokers, agents and clients understand the exposures and how to properly mitigate the issues,” says Bill Gatewood, Corporate Vice President and Director, Personal Insurance, Burns & Wilcox. “Enhancing this understanding is critical as many homeowners will often turn to self-insurance, which can be extremely risky.”
Here are five contributing factors that can make homes hard-to-place:
1. Physical Structure: Often the physical structure itself is a challenge. The home may be older or in need of repairs or updates to the electrical or plumbing systems. Alternatively, a client may purchase a home that is still under construction or renovation which may disqualify it for a standard homeowners’ policy.
2. Location: Homes may be located in areas prone to coastal wind, earthquake, flood or wildfire. Often, these homes are in a remote location, several miles from a fire department, placing them at greater risk for fire.
3. High-Value: High-value homes and the contents inside often create a challenge for the standard insurance market. These homes and their owners require a specialty insurance carrier that caters to the affluent market.
4. Client Profile: High-profile clients, such as celebrities, professional athletes or entertainers are natural targets for lawsuits and may not qualify for standard home policies because of the high limits of liability they require. Conversely, clients with a history of credit or payment issues may also have difficulty obtaining standard coverage.
5. Previous Claims: Some applicants have filed too many insurance claims or certain “red flag” types of claims such as dog bites and have been non-renewed or cancelled from the standard market.
Numerous insurance options are available for hard-to-place risks if brokers and agents partner with the right wholesaler or MGA. By working with a partner with in-house underwriting and pricing authority – such as Burns & Wilcox – brokers and agents can tailor creative coverage solutions to fit the exposures faced by their clients.