Homeowners Rebuilding After Helene Face Limited Insurance Coverage
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Here's your Money Briefing for Wednesday, October 9th. I'm J.R. Whelan for The Wall Street Journal. As Florida braces for Hurricane Milton, damage assessment and cleanup from Hurricane Helene continues. Some homeowners filing insurance claims are discovering the payout will be considerably less than what they were expecting.
We've seen with previous big hurricanes, a lot of litigation, a lot of disputes from homeowners claims. And the indications from the early claims that have been decided on Helene is that a lot are getting close to that payment. So that means, unfortunately, people are walking away empty handed.
How are homeowners discovering gaps between expected payouts and actual insurance claims after Hurricane Helene?
We'll talk to Wall Street Journal insurance industry reporter Jean Eaglesham after the break.
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What policy exclusions and recent insurer changes are reducing coverage for storm damage?
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Some homeowners who were hit by Hurricane Helene are finding that not all damages to their property will be covered by their insurance policy. Wall Street Journal reporter Jean Eaglesham joins me. Jean, why would the amount of coverage in someone's policy be different than what they expect?
How have deductibles and valuation methods for roof and wind damage changed recently?
Well, one big reason is perils that are excluded. So the typical homeowner's policy won't cover a lot of flooding damage. Another thing is that in recent years, we've seen home insurers restrict the coverage they get. That's in response to sort of high losses they've had from natural catastrophes.
Why doesn't standard homeowner's insurance cover flooding and who provides flood insurance?
So you're seeing things like much higher deductibles, which is the first percentage of losses from wind claims that you have to pay. So areas where we're seeing changes are things like for roof damage and a lot of switch now from giving you the replacement cost of the roof to giving you the cash value.
How will these insurance policy changes affect homeowners filing claims from Hurricane Helene?
That can be a big difference. We're also seeing things like limitations on the total amount of interior water damage. We're seeing higher deductibles for certain types of wind damage. So the first percentage you have to pay of a claim might save increase from 2% to 5%, or even higher, even 10% in some of these very vulnerable areas.
When did insurance companies begin making these changes?
How are state regulators balancing consumer protection with keeping insurers in risk-prone areas?
Over the last sort of three or four years, insurance companies have suffered consistently quite high losses on their home insurance. That's due to a combination of increased losses from extreme weather like hurricanes, but also high inflation, more people living in these vulnerable areas. So the insurance responded to those losses by in some cases pulling coverage altogether, but also more generally on policies by limiting and restricting the coverage they offer.
We've seen images of major flooding from the most current hurricanes. How does flood insurance factor into someone's homeowner's policy?
Could recent hurricanes prompt wider flood-insurance reforms or mandatory coverage changes?
Typical homeowner's insurance policy unfortunately doesn't cover flooding. It doesn't cover what they call water damage from the ground up. People will need a separate standalone flood insurance policy for that. And unfortunately, very, very few people who were hit by these recent hurricanes do have such coverage.
Was it ever common for flood insurance to be part of a homeowner's policy?
Flood insurance was excluded from homeowners policies quite a long time ago, decades back. Essentially, insurers decided they just couldn't afford to cover it. And that's why the federal flood insurance program was set up over 50 years ago. So people really do need that federal cover, or they need certainly a separate standalone flood insurance policy to be covered for these kind of catastrophes.
How are these changes likely to impact homeowners who are in the path of Hurricane Helene?
homeowners are going to find they're going to struggle to get payments from the insurance company. And we've seen, sadly, with previous big hurricanes like Hurricane Ian, a lot of litigation, a lot of disputes from homeowners' claims. And the indications from the early claims that have been decided on Helene is that a lot are getting close to that payment.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:01–1:07
2
How are homeowners discovering gaps between expected payouts and actual insurance claims after Hurricane Helene?
1:07–1:27
3
What policy exclusions and recent insurer changes are reducing coverage for storm damage?
1:27–1:59
4
How have deductibles and valuation methods for roof and wind damage changed recently?
1:59–2:17
5
Why doesn't standard homeowner's insurance cover flooding and who provides flood insurance?
2:17–2:35
6
How will these insurance policy changes affect homeowners filing claims from Hurricane Helene?
2:35–3:01
7
How are state regulators balancing consumer protection with keeping insurers in risk-prone areas?
3:01–3:37
8
Could recent hurricanes prompt wider flood-insurance reforms or mandatory coverage changes?
3:37–8:31
Speakers
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