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Homeowners insurance crisis hitting these 15 states, report says

Severe weather is pushing insurance to the brink

October 15, 2024

Headlines have focused on home insurers pulling out of California and Florida, but there are 15 other states that are facing an "imminent" homeowners insurance crisis, according to a report from insurance-comparison website Insurify.

The culprit is severe weather, such as flooding and hail, hiking up homeowners insurance rates and causing insurers to pull out of statesthat used to have low-cost, widely-available insurance.

"The 2020s have been the worst decade to date in terms of damages caused by severe weather and natural disasters," Chase Gardner, data insights manager at Insurify, told ConsumerAffairs. "It's also happening with smaller events likesevere thunderstorms across huge portions of the U.S."

Unless legislation tackles the problems and efforts are made to make communities more resilient to weather, homeowners can expect weather-related rate hikes and less competition among insurers in the states, Insurify said.

Insurify singled out the 15 states based on how insurers have been pulling back,increasing rates and conversations with insurers about concerns in the states.

The 15 states facing a homeowners insurance crisis are:

• Alabama
• Arizona
• Arkansas
• Colorado
• Hawaii
• Illinois
• Iowa
• Michigan
• Minnesota
• Mississippi
• Missouri
• North Carolina
• Oklahoma
• South Carolina
• Texas

Why are these states having problems with homeowners insurance?

The homeowners insurance crisis is spreading to more states because climate conditions are changing andlosses from weather continues to mount.

Michigan, which has the highest projected homeowners insurance increase of 14% in 2024, is seeing ice cover decrease on the Great Lakes that can cause more rainfall and flooding, Insurify said.

Insurer SECURA last year stopped offering personal lines of insurance in Michigan and several other states.

South Carolina, which comes second to Michigan with a projected increase of 11%, is suffering from the aftermath of Hurricane Helene, but homeowners were already paying 29% more than the U.S. average, Insurify said.

South Carolina used to have an average of $1.5 billion in individual weather events annually in the 1990s, but the 2000s has averaged at $5 billion, Insurify said.

State-run homeowners insurance providers, which are often a choice of last resort, are now taking on more clients than they can sustainably handle in the states after insurers have pulled out, Insurify said.

How have homeowners insurance rates been rising overall?

Homeowner insurance rates are expected to increase 6% in 2024, less than the around 12%uptick in 2023, Insurifysaid, but the hikes are still higher than the roughly 2% increases that took place in previous years.

"I wouldn't be surprised if rates kept rising faster than historical averages," Gardner said.

Since the 1980s, every decade has had higher damages from severe weather, even after adjusted for inflation, Garder said.

There was around $21 billion worth of damages from severe weather in the 1980s, but that number reached $123 billion just through 2023 from 2020, Gardner said, citing data from the National Oceanic and Atmospheric Administration.

This year isn't looking good either afterHurricanes Helene and Milton are expected to cause up to $47.5billionand $175 billionworth of damages, respectively, according to early estimates,CNBC reports.

"It's hard to say rates will return to a normal cadence," Garnder said.

Tue, 15 Oct 2024 13:52:09 +0000

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FCC waives Lifeline eligibility for Hurricane Milton and Helene

Here's how to apply

October 15, 2024

The Federal Communications Commission (FCC) announced discounted phone and internet service for victims of Hurricanes Milton and Helene through the Lifeline program. The agency also eased enrollment requirements to ensure easier access for those affected by natural disasters.

The FCC voted to temporarily waive certain eligibility rules for the Lifeline program. This allows individuals receiving federal disaster assistance from the Federal Emergency Management Agency's (FEMA) Individuals and Households Program (IHP) to qualify.

Additionally, households receiving emergency food assistance through D-SNAP in impacted areas are now eligible.

FCC makes it easy for those affected

Lifeline helps low-income folks save money on phone and internet bills. Depending on your situation, you could get up to $9.25 off your monthly broadband service or $5.25 off phone service. On Tribal lands, the discount jumps to $34.25.

This action builds upon a previous measure preventing existing Lifeline subscribers in affected areas from service disconnection during recovery.

If you are interested in signing or just need more information, the Universal Service Administrative Company (USAC) can help you apply under this new program. Check out their website at lifelinesupport.org for all the details.

Tue, 15 Oct 2024 20:29:57 +0000

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Don't relax yet: Hurricane season has weeks to go

Not ready to move? Here are some tips to strengthen your home against storms

October 14, 2024

It's been a "crazybusy" year, one meteorologist said in an AP story about the back-to-back hurricanes that struck the East Coast and warned there may be more to come.

The hurricane season doesn't officially end until November 30 and meteorologists saythat tropical cyclone activity continues to be above normal, thanks in part to record-high ocean temperatures.

Translation: Don't put away the generator and plywood yet. It's not over til it's over.

I think probably two or three more named storms by the first week of November is a good bet with at least one of those being a hurricane, said Jeff Masters, meteorologist for Yale Climate Connections, in the Associated Press report.

Staying prepared as hurricane season tapers off is more essential than ever, experts say, as climate change makes the oceans warmer and sets the stage for bigger storms more often and for a longer hurricane season each year.

"Miltons 11% increase in winds because of human-caused climate change likely made it nearly twice as destructive," Masters said in a Yale Climate Connections article.

Plenty of screwball theories

While rescue supplies may have been in short supply in some devastated locations in Florida, North Carolina and elsewhere, there's been no shortage of whacko theories.

One of the most outlandish rumors making the rounds is that the government is controlling the weather and, presumably, trying to drown out GOP-inclined voters in the Southeast.

Tired of such nonsense, a group of scientists late last week said it's clear thatclimate change is the operative factor in creating deadlier storms.

A report from World Weather Attributionfound that climate change is enhancing conditions conducive to the most powerful hurricanes like Helene, with more intense rainfall totals and wind speeds."

According to the report, rainfall was roughly 10% heavier due to warming, and maximum wind speeds of similar storms are now about around 11% greater due to warming.

Some may question the cause but with sustained winds of 140 miles per hour, Hurricane Helene was one of the most ferocious storms ever to hit North America, inflicting catastrophic human and financial burdens.

The latest loss estimates came from Verisk, which said insured losses in U.S. for Hurricane Helene will range between $6 billion to $11 billion. AccuWeather says losses are likely to be between $225 billion and $250 billion.

What to do

Millions of consumers live in hurricane-prone areas and many are discovering that they're not insured against water damage from storms. Even those whose insurance is paying up are wondering whether to rebuild their shattered homes or move on to a more weather-friendly part of the country.

Many old-timers in Florida, Louisiana and other coastal areas ride out storm after storm. While that may not always be prudent, having a solidly builthome and stocking the right emergency supplies can go a long way towards improving the odds. There are many ways to make homes more resistant to damage. Here's a breakdown of some key strategies:

Strengthening the Structure

• Roof: This is the most vulnerable part of your house.

• Use hurricane straps or clips to connect the roof to the walls securely.

• Choose impact-resistant roofing materials like metal or high-wind asphalt shingles.

• Ensure proper sealing and maintenance to prevent leaks.

• Walls:

• Use reinforced concrete or masonry walls for greater strength.

• For wood-framed homes, use stronger sheathing and bracing.

• Securely attach walls to the foundation.

• Windows and Doors:

• Install impact-resistant windows or hurricane shutters.

• Reinforce garage doors to withstand high winds.

• Seal all openings to prevent water intrusion.

• Foundation:

• Elevate the home to reduce flood risk.

• Use a strong foundation design, such as a continuous foundation wall or piers.

• Anchor the foundation to the ground with straps or anchors.

Other Important Considerations:

• Landscaping: Trim trees and shrubs near the house to prevent them from becoming projectiles.

• Drainage: Ensure proper drainage around the house to prevent flooding.

• Secure Outdoor Items: Bring loose objects inside or secure them to prevent them from causing damage.

Resources:

• FEMA: Building a strong home

• Ready.gov:Hurricane preparation

• Insurance Institute for Business & Home Safety (IBHS): Disaster safety

By taking these steps, you can significantly increase your home's ability to withstand hurricane forces and protect your family and belongings.

These tips come from FEMA, Point.comand elsewhere.

This FEMA video may also be helpful.

Mon, 14 Oct 2024 00:10:16 +0000

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Home leasebacks look attractive, but the looks can be deceiving

Experts say there are safer alternatives that are just as good

October 11, 2024

Sale-leaseback agreements are emerging as a way to give homeowners who've amassed a mountain of equity totap into that by offering a tempting proposition: get a large sum of cash while staying in your home.While this might sound like an ideal solution --especially for seniors or those facing financial difficulties --it's crucial to understand how these agreements work and weigh the potential risks before making a decision.

Sale-leasebacks involve selling your home to a company and then leasing it back from them, essentially becoming a renter in your own house. This arrangement can provide much-needed financial relief, but it's important to be aware of the potential drawbacks. The Federal Trade Commission (FTC) recently issued a consumer alert warning that homeowners may not fully understand the complexities of these agreements.

[They] sound like a simple and risk-free way to get cash upfront and stay in your home. But the truth is these agreements are far from risk-free, Nick May, FTC Assistant Director, said.

Matt Schwartz at VA Loan Network, told ConsumerAffairs The main issue with sale-leaseback agreements is that homeowners often dont realize theyre no longer in control of their property. They transition from homeowners to renters, which means theyre subject to additional fees that may not have been fully disclosed upfront.

NPR investigates the situation

Two recent NPR investigations shed light on the potential downsides of sale-leasebacks, particularly for those who may be facing financial difficulties. One investigation revealed that some homeowners experienced unexpected fees, rising rents, and ultimately a loss of equity. The other called into question whether or not these deals were actually loans. Both focused on leaseback provider EasyKnock.

EasyKnock maintains that their agreements are transparent, have helped many people, and have successfully defended their position in arbitration. "We're empowering people. We're giving them control. We're giving them choices. We're giving them time, EasyKnock co-founder and CEO Jarred Kessler, told NPR. And the home values historically have rarely gone down, so they should be able to get appreciation.

Lets look at those 'fees'

The fees in a sale-leaseback are more than just a buck or two. The FTCs May called them hefty and the rent exorbitant. For example, processing fees can run up to 6%. If you fall behind on your rent, you could wake up with a $100 late fee tacked on, too. And if someone is evicted as May says happens often theres even more legal fees.

All told, the fees can run well into the thousands. In one transaction NPR examined, the homeowner got a check for $27,688 upfront, but by the end of the deal, he also owed $29,492.

Where things get rough

It's important to recognize that leaseback customers have varied experiences. Some ConsumerAffairs reviewsmentioned experiences that were "anything but seamless," while others said the company they used was "honest from the get-go."

In a letter to EasyKnock, Michigan Attorney General Dana Nessel highlighted a common misunderstanding among homeowners entering these agreements wasincorrectly believingthey'dreceive the full market value of their home, minus any outstanding mortgage and liens.

However, they often find out later that the actual payout is significantly less. This discrepancy, Nessel argues, stems from a lack of transparency about fees, costs, rent, and repurchase price. These factors can significantly erode the homeowner's equity over time.

At this point, homeowners are faced with a difficult choice: accept the unfavorable terms or fight back.Unfortunately, challenging these agreements isn't easy. As real estate investor Erwin Miciano pointed out, "These deals often come with terms that can quickly turn sour often terms they cant renegotiate."

Mixed experiences call for careful consideration

Its important to note that leaseback customers dont all have the same experience. There are complaints about unexpected fees and deceptive communication, while some customers had positive experiences, praising the professionalism and saying they found the process to be quick and easy.

What do these reviews mean for you? Take your time, scrutinize, and consult an attorney.

Both May and Miciano say that at the very least, you should involve a trusted family member or friend to review the documents. If they find a red flag that would cost you tens of thousands, its worth asking.

May adds that if your agreement is different from what the buyer promised or is too complicated to understand, you should stop right there and not move an inch forward.

These contracts can be complex, and homeowners need to fully understand what theyre agreeing to before signing on the dotted line, Miciano emphasized.

Other ways to get the same benefit

While lease-backs might seem like an easy fix, experts recommend exploring these alternatives:

• Cash-out refinance: If youre a homeowner needing cash and have at least 20% equity in your property, a better option may be doing a cash-out refinance. Or, depending on the interest rates and associated expenses, a home equity loan could cost less over the long run, Laura Adams, MBA, personal finance author and real estate expert with iBuyer.com, told ConsumerAffairs.
• Home equity loan/HELOC: Borrow a lump sum (loan) or access funds as needed (HELOC) against your equity. Generally lower interest rates than personal loans. HELOCs offer flexibility but have variable interest rates. Heres more information on how one works.
• Reverse mortgage: For homeowners 62 or older, convert equity to cash with no monthly payments. Loan must be repaid upon sale, move, or death. However, reverse mortgages are not without pitfalls of their own, such as the loan must be repaid when the homeowner sells, moves, or passes away.
• Downsizing: A win-win as this frees up cash and reduces ongoing housing costs. If you cant afford to make costly home repairs required for a buyer to get financing, another option is selling it as-is for cash, Adams suggests.

Ultimately, the best choice depends on your individual circumstances and financial goals, so it's crucial to consult with a financial advisor to explore your options.

Sat, 12 Oct 2024 01:37:18 +0000

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'Unauthorized activity on the network,' ADT reports

The security company says someone got access to employee records

October 9, 2024

Lots of homeowners use ADT to keep their homes safe from burglary, fires and other hazards. But ADT has had a few security problems of its own lately, including the presence of an "unauthorized actor" on its network.

The compamysaid this week that someone hadillegally accessed its network using credentials obtained through a third-party business partner. A few months ago, in a separate security breach, someone accessed order details and "limited" customer information.

"ADT has hired leading third-party cybersecurity experts to assist with the companys response to the incident, and is working closely with federal law enforcement, the company said iin a filing with the Securities and Exchange Commission. The company is also cooperating closely with its third-party business partner to address the incident.

In the latest incident, ADT said the security breach affected only employee information that was in encrypted form.

The company said it has taken steps to shut down the unauthorized access and is cooperating with federal and local investigators.

Wed, 09 Oct 2024 18:26:20 +0000

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