What To Do if Insurers Leave You in the Cold

If you feel like you are getting the cold shoulder from your home insurance provider, you are not alone. Homeowners across the United States are facing a double threat in the insurance market: soaring rates and the risk of losing coverage altogether. Recent data paints a stark picture: Insurance premiums jumped 33% from 2020 to 2023, according to the National Bureau of Economic Research. Florida leads all states, as average annual premiums were close to $11,000 in 2024, while Louisiana homeowners were facing rates of $7,800—a 23% increase in a single year, according to Insurify.

The problem goes beyond just rising costs. Insurance companies are also dropping coverage in high-risk areas, with nonrenewal notices surging by nearly 30% from 2018 to 2022, according to a Treasury report examining 246 million policies nationwide. Florida, Louisiana and North Carolina are seeing the highest nonrenewal rates, surpassing even California’s widely publicized insurance crisis, according to a Senate report released in December. In some areas, like Florida’s Glades County, insurers dropped 16% of homeowners in 2023 alone.

Major insurers like State Farm, Allstate and Farmers are pulling out of states they view as too risky, while others are dramatically reducing their coverage areas. This retreat, combined with inflation and more frequent severe weather events, has left many homeowners scrambling to find affordable coverage—or any coverage at all.

If you are facing these challenges (or expect to), understanding your options is crucial. The following checklist has guidance to protect yourself against rate hikes or prepare for loss of coverage if insurers leave you out in the cold.

If You’re Facing Rate Increases

Document Your Home (Do This Now)

• Take detailed photos/videos of your property and its safety features.
• Get a professional home inspection with special attention to roof, electrical and plumbing.
• Compile maintenance records and home improvement receipts.
• Document any claims history (or lack thereof).

Shop for New Coverage

• Start comparing rates three to four months before renewal.
• Contact multiple carriers and an independent broker.
• Research your state’s FAIR (Fair Access to Insurance Requirements) plan or insurance pools.
• Consider higher deductibles to lower premiums.

If You Get Dropped

Take Immediate Action

• Document the cancellation notice and contact your mortgage company.
• Call your state’s insurance department about your rights.
• Start applications with new carriers immediately.
• Check eligibility for state-backed insurance programs.

Explore Alternative Coverage Options

• Split coverage between carriers (separate wind/fire/flood policies) or pools.
• Look into surplus lines carriers (more expensive but they may be willing to insure).
• Check state-specific high-risk pools.

Last Resort Options

Take These Steps if Insurance Becomes Unaffordable

• Research self-insurance requirements in your state (see more on this below).
• Consider moving to a lower-risk area.
• Look into creating an LLC to own property.
• Investigate hybrid options (high deductible + savings fund).

Research Government and State Programs

• Check state-sponsored insurance programs.
• Research government assistance to make your home more insurable (home hardening).
• Look into FEMA or state grants.
• Contact your local consumer protection office.

What Is Self-Insurance?
Self-insurance means taking on the financial risk yourself instead of transferring it to an insurance company.

This can work several ways:

1. Pure self-insurance: You set aside enough money to cover potential losses. For example, if your home is worth $400,000, you would need to maintain a fund large enough to repair or rebuild in case of a disaster. This often requires either:
   • Paying off your mortgage (since mortgage companies usually require insurance)
   • Maintaining a very large, dedicated savings account/investment fund
2. Partial self-insurance: This involves taking a much higher deductible (like $25,000 or $50,000) in exchange for lower premiums and maintaining a fund to cover that deductible.
3. Formal self-insurance: This means creating a legal structure (like a captive insurance company) that acts as your own insurance company. This is more common for businesses but is sometimes used by wealthy individuals with multiple properties.

Important notes about self-insurance:

• It’s rarely allowed with an active mortgage.
• Some states require proof of ability to self-insure.
• You need significant liquid assets.
• You’re taking on all the risk yourself—there is no safety net.
• You still might need liability coverage.

Self-insurance is usually a last resort when traditional insurance becomes unavailable or unaffordable. It requires careful financial planning and significant resources to put in place.

Remember: Whether you’re shopping around for more affordable coverage or you’re worried that you may be dropped, start the process early. Options become limited if you wait until the last minute or if your policy lapses. While RWA Wealth Partners does not sell insurance, our team can review your coverage and help you budget for self-insurance or additional lines as needed.