Dumped by home insurer after a disaster?

In some areas, concerned citizens are making a difference. In coastal Alabama, for instance, CALC has worked to educate state legislators about the increasing difficulty to obtain insurance. Their efforts seem to be working. In 2009, the Alabama state legislature passed a bill requiring insurance companies to give premium discounts to homeowners who take steps to strengthen their homes, says Ben Brooks, an Alabama state senator. In early 2011, new bills addressing coastal insurance reform began working their way through the Alabama state legislature.

Don't take it personally if your policy is dropped. "When a carrier makes a decision to leave a certain area, it usually affects all policies in that area," Berger says. "Carriers are heavily regulated, and this tends to be a regulated process. When State Farm dropped 125,000 policies in Florida, most of these dropped policyholders had been loyal State Farm customers for years and many never made a claim. Unfortunately, in the end it is an economic decision."

While you can try to fight the decision, obtaining a victory is extremely difficult. "The carrier must provide the policyholder a written reason for the decision to drop, and this reason is hard to fight," Berger says. "In most states you can file a complaint with the department of insurance, which may investigate your complaint, but this can be a lengthy and unrewarding process. Unfortunately, it is easier to find a new carrier than fight being dropped."

Search for a new carrier with an open mind. If your policy is dropped, start by finding a good multilines insurance agent. "Your agent should be able to find multiple carriers or at a minimum, one option for insurance," Berger says.

In addition to a good multilines agent, Berger suggests contacting your state department of insurance to find out who is writing policies in your area. Don't get too concerned if you've never heard of the companies that are your options. "Remember that while insurance companies spend billions of dollars on advertising annually, there tends to be minimal differences between insurance companies," Berger says. "Don't be disappointed if you do not get your 'name brand' carrier."

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