“ A combination of changes — like making homes more resilient , reforming state programs and spreading risk more fairly — could help , but there ’ s no quick fix ,” says Jasmine Ball , a CFP Board ambassador and founder of Bamboo Financial Partners in Tulsa , Okla .
What To Tell Clients
Meanwhile , big-picture solutions aside , many advisors are struggling to find the right words to offer clients who have lost their homes . Even those who still have a place to live can no longer find or afford home insurance . Many of the biggest carriers have pulled back from the $ 15 trillion market .
Over the past few years , State Farm and Allstate stopped issuing new homeowner policies in California . Farmers Insurance Group , which had already ceased offering new home coverage in Florida , stopped renewing roughly a third of its existing policies there . American International Group ( AIG ) has limited coverage in certain ZIP Codes in California , Florida , New York , Delaware , Colorado , Montana , Idaho and Wyoming , among other states .
Steve Parrish , a professor at the American College of Financial Services , says it might take a while for homeowners to get insurance in high-risk areas . “ Treat obtaining homeowners insurance in highrisk areas more as a marathon than a sprint ,” he says .
He recommends starting with a local insurance broker , rather than calling one of the big national carriers . Local brokers , he says , have a feel for the market , which can save a client time . Homeowners next have to find out why they are being rejected for insurance .
“ Find out where the deal-killers are ,” Parrish says . If your clients have a roof that ’ s too old , for instance , they should check to see if a roof replacement would make them eligible for coverage . “ Insurers have a reason to be cautious ,” he says , so homeowners should know what steps to take .
When you do find insurance , he says , it ’ s important to determine exactly what is covered . Some policies may cover roof repairs but not mold or flood damage , for
Until late last year , California prohibited insurance companies from basing their rates on “ catastrophe models ” that project disaster risk . This restricted premium increases , and many carriers left the state .
example . “ Flood insurance is a separate , expensive and important coverage to obtain ,” he says .
Homeowners should also make sure their carriers are accredited . Every state has an insurance department that monitors carriers and brokers , and a guarantee program that pays legitimate claims if the insurer becomes insolvent . These state guarantees are funded by insurance companies , but only those companies that are dubbed “ admitted ” carriers are actually contributors to the program . If a homeowner ’ s carrier doesn ’ t have this designation , experts suggest that the homeowner should consult private rating agencies such as AM Best and J . D . Power before buying coverage .
For many homeowners , though , the last resort is to get insurance through a state-regulated Fair Access to Insurance Requirements plan ( also called a FAIR plan ). These may go by different names , but they are available in every state .
“ State programs are becoming the only option for many , but they can double or triple premiums , which has forced some families out of their homes ,” says Ball . The state insurance programs “ need reform to be more accessible and sustainable ,” she adds .
Still , she insists that having insurance is essential . “ We ’ ve seen how devastating it can be for families who experience a loss without insurance — rebuilding or recovering becomes nearly impossible without it ,” she says .
Why are home-insurance policies so expensive ? According to industry insiders , the causes of price hikes and supply shortages are multifaceted and numerous . “ Rising insurance costs are driven by a complex mix of factors ,” says Jon Ward at the American Property Casualty Insurance Association in Washington , D . C .
He points to the impact of inflation on
52 | FINANCIAL ADVISOR MAGAZINE | MARCH 2025 WWW . FA-MAG . COM