In the past, contractors and homeowners could rely on homeowners’ insurance to cover most of the cost of repairs resulting from weather, fires, and other risks. Today, however, factors such as climate change, severe weather, and rising material and labor costs have prompted insurance companies to increase premiums and reduce payouts.
Some insurers have even exited certain markets due to an increased level of risk, leading to fewer options, higher premiums, and potentially lower payouts for homeowners. This has sent many homeowners scrambling to find coverage at any price. They have also been forced to reduce coverage and significantly increase their deductibles to make insurance affordable.
The changing homeowners’ insurance environment can make an already difficult recovery process slower, more costly, and stressful, forcing homeowners to bear a larger portion of the repair or replacement expenses. This means homeowners in need of immediate repairs may not have the funds required to cover the cost. The availability of a fast, easy, and reliable financing solution can make it much easier for homeowners to rebuild both their homes and their lives.
Although many factors have resulted in the challenging insurance environment, a number of events have prompted insurers to reconsider premiums and coverage limits. These include the increasing frequency and severity of hurricanes in Florida, severe storms in many parts of the country, and the growing risk of wildfires in the Southwest.
To mitigate financial losses, insurers have modified policies to increase deductibles and limit coverage for many risks like wind, fire, and hail damage; especially in areas prone to natural disasters. For example, some policies now include deductibles based on a percentage of the home's insured value, rather than a set amount.
The added cost and reduced availability of insurance have forced some homeowners to turn to state-backed insurance programs, which may offer lower payouts than private insurers, increasing the homeowner’s financial burden. Even those who have insurance may find that their coverage is insufficient, reflecting the ever-increasing replacement costs.
When helping Customers recover from unexpected and severe natural events, it is important to work with their insurance provider, if possible, to ensure that they know the extent of the damage. It is also important to assure the homeowner that financing can help them achieve the best possible recovery, despite the increased out-of-pocket spending requirements.
Learn more about how financing can fuel growth for your home improvement Business