5 Best High-Risk Homeowners Insurance Companies In 2024

Over my 15 years in the insurance industry, I’ve seen just about everything – from the straightforward to the complex. One area I’m experienced in is homeowners insurance. Having owned and insured a home in Florida, I know how overwhelming it can feel, especially when you’re labeled ‘high-risk’ and are searching for the right coverage.

I’ve been there, and I’ve guided many families through the challenge of finding the best coverage. You’re in the right place to get the real scoop on high-risk homeowners insurance. Let’s make sure you have the knowledge and confidence to make the best decisions.

What Makes A Home High-Risk?

There are several factors that can affect a home’s risk rating and put it in the “high-risk” category:

Homeowner-Related Factors

At times, the risk stems from the homeowner’s personal history rather than the property itself. A homeowner with multiple claims on previous insurance policies can be flagged as high-risk. This is because a history of frequent claims might indicate potential future claims on your homeowners insurance policy. Additionally, if the homeowner has a poor credit score, some insurance companies might perceive this as an indicator of financial irresponsibility, which could translate to lapses in home maintenance or increased risk of default on policy premiums.

Property-Specific Factors

The condition and age of the home play crucial roles in its risk assessment. Older homes, especially those not updated to current building codes, can be more susceptible to damage. Issues like outdated electrical systems, old plumbing, or a worn-out roof can increase the chances of potential claims. Furthermore, if the home has specific high-risk features such as a swimming pool or a trampoline, it may be deemed more hazardous, leading to a higher insurance premium.

Location-Based Factors

Where a home is located can significantly influence its risk profile. Properties situated in areas prone to natural disasters, such as flood zones, earthquake hotspots, or regions with a high likelihood of hurricanes, will often be categorized as high-risk. Additionally, homes in neighborhoods with high crime rates, frequent vandalism, or burglaries might also face higher insurance premiums due to the increased risk of property damage or theft.

What States Are Considered High-Risk?

These states are commonly considered “high-risk” by homeowners insurance companies:

• Florida: Due to its susceptibility to hurricanes, tropical storms, and flooding, Florida is a top high-risk state. The state’s coastal location exposes it to severe weather events, leading to higher homeowners insurance premiums.
• Texas: The Lone Star State faces a variety of natural disasters, including hurricanes along the Gulf Coast, tornadoes in the plains, and hailstorms. Additionally, parts of Texas experience flooding and wildfires.
• California: Earthquakes are the primary concern, but California also deals with wildfires, especially in areas with dry vegetation. Coastal areas can also be at risk for flooding.
• Louisiana: Similar to Florida, Louisiana is prone to hurricanes and flooding, especially in the delta region. Its low-lying topography makes it particularly vulnerable.
• Oklahoma: Tornadoes are a significant concern in Oklahoma, given its location in “Tornado Alley.” Hailstorms and severe thunderstorms are also frequent occurrences.
• South Carolina: Coastal areas of South Carolina are vulnerable to hurricanes and tropical storms. Flooding can also be an issue, especially in low-lying areas.
• Mississippi: Like its neighbors, Mississippi faces threats from Gulf Coast hurricanes. Flooding and storm surges are common concerns.
• Alabama: Situated on the Gulf Coast, Alabama is exposed to hurricanes, tropical storms, and the associated risks of flooding and wind damage.
• Missouri: Located in the Midwest, Missouri is another state that falls within “Tornado Alley,” making it a high-risk area for tornado-related damages.
• Alaska: Due to its unique challenges, including extreme cold and the potential for earthquakes and tsunamis, Alaska can be considered high-risk.

How To Get High-Risk Home Insurance

Whether your home is located in a natural disaster-prone area, is of high value, or you’ve had previous claims that have labeled you a high-risk, it’s essential to know the steps to secure the right coverage. Here’s a simplified five-step guide to help you obtain high-risk home insurance:

1. Understand Your Risk: Before diving into the search, identify the reasons you might be considered high-risk. This could be due to the location of your home, its age, its value, or even your personal claim history. Understanding your specific risk will help you pinpoint the coverage you need.
2. Shop Around: Don’t settle for the first quote you receive. Different homeowners insurance companies accept different risks. Some might specialize in high-risk homes or offer discounts that others don’t. By getting multiple quotes, you can find the best homeowners coverage at the most competitive price.
3. Work with a Specialized Agent: Consider partnering with an insurance agent who specializes in high-risk properties. They’ll have a deeper understanding of the challenges you face and the insurers most likely to offer favorable terms.
4. Consider a Surplus or Excess Line Insurer: If standard insurers deny you, look into surplus or excess line insurers. These companies specialize in risks that standard insurers won’t cover. Just be aware that they’re not backed by state guaranty funds, so it’s crucial to choose a reputable company.
5. Review and Adjust Annually: As with any insurance policy, it’s essential to review your high-risk homeowners insurance annually. Your risk level might change, or there might be new discounts available. Regular reviews ensure you always have the best coverage at the best price.

What Is A FAIR Plan For High-Risk Insurance?

The FAIR Plan, which stands for “Fair Access to Insurance Requirements,” is a safety net for homeowners who find it challenging to obtain standard homeowners insurance due to their property being deemed high-risk. Often, homes in areas prone to natural disasters or those in urban locales with a higher likelihood of theft or vandalism might be denied traditional coverage.

In such situations, the FAIR Plan comes into play, offering a basic form of property insurance to ensure that homeowners aren’t left without any protection.

Established in the 1960s, the FAIR Plan was a response to the urban riots that led many insurance companies to deny coverage to city homeowners. Each state’s FAIR Plan operates a bit differently, but in essence, they all provide a shared market plan where private insurers pool together to offer coverage to high-risk properties.

FAIR Plans are typically considered the insurer of last resort. This means you should exhaust all other options before resorting to a FAIR Plan, as the coverage might be limited and possibly more expensive than conventional policies.

While FAIR Plans ensure that every homeowner has access to insurance, they are not a replacement for standard homeowners insurance. They often provide more limited coverage, and homeowners might need to purchase additional policies to be fully protected.

How To Get FAIR Insurance Coverage

Remember, the specific structure and regulations of FAIR plans can vary by state. Always consult with your local insurance department for the most accurate and up-to-date information.

How Much Does High-Risk Homeowners Insurance Cost?

High-risk homeowners insurance typically comes at a premium compared to standard policies due to the elevated risks involved. On average, you can expect to pay anywhere from 20% to 200% more for high-risk coverage, depending on the specific factors making your home high-risk.

For instance, if you live in an area frequently hit by natural disasters like hurricanes or wildfires, your premiums might be on the higher end of that spectrum. On the other hand, if you have a single previous claim, you might see a more moderate increase.

For example, let’s say the average standard homeowner’s insurance policy in a particular state costs $1,000 annually. A homeowner in a high-risk flood zone in that state might see their premium jump to $2,500 or more due to the increased likelihood of flood damage. Similarly, a homeowner with a history of multiple claims in a short period might find their rates increased to $1,500 or $2,000 annually, even if their home isn’t in a disaster-prone area.

What Does High-Risk Home Insurance Cover?

High-risk home insurance, while tailored to homes and homeowners considered a higher risk by insurance companies, provides coverage that’s fundamentally similar to standard home insurance policies. Here’s a breakdown:

Dwelling Coverage: Just like standard policies, high-risk insurance covers the physical structure of the home – the walls, roof, floors, and built-in appliances. If a covered peril, like fire or wind, damages the home, this portion of the policy helps with the repair or replacement costs.

Personal Property: High-risk policies also provide protection for the homeowner’s belongings, whether they’re in the home, garage, or even temporarily off-premises. This includes furniture, electronics, clothing, and more. If these items are stolen or damaged by a covered event, the insurance can help replace them.

Liability Protection: Accidents happen, and if someone gets injured on the property, or if the homeowner unintentionally causes injury or property damage to someone else, the liability portion of the high-risk policy provides coverage. This is akin to liability protection in standard policies and can cover legal fees and medical bills.

Additional Living Expenses: If a covered peril makes the home uninhabitable, high-risk insurance can help with the extra costs associated with living elsewhere temporarily, such as hotel bills and additional food expenses.

While the core coverages are similar, it’s essential to note that high-risk home insurance might come with higher deductibles, certain exclusions, or specific conditions, given the increased risk associated with the policy.