What can insurers do to help homeowners reduce their disaster risk?
Insurance companies work with homeowners to reduce risk through various strategies and initiatives aimed at minimizing the likelihood of property damage or loss. These efforts benefit both the homeowners and the insurance companies by decreasing the frequency and severity of claims, ultimately leading to more sustainable and affordable insurance coverage.
Over the last decade, the landscape has gotten more and more uncertain, with insurance companies dropping out of states and refusing to write policies in risky neighborhoods. This also puts a damper on the kinds of resources available to the average homeowner who is, more often than not, in the dark about what all their policy covers and what they can do to reduce their costs.
Here are several ways insurance companies can further collaborate with homeowners to mitigate risks, starting with risk assessments.
Insurance companies can sometimes offer risk assessment services that are homeowner facing, and get results in variability they would otherwise be blind to. These assessments, whether virtual or in-person, provide guidelines and advice to homeowners and underwriters on identifying potential hazards on their property. This could include suggestions on securing windows and doors, installing smoke detectors, maintaining proper drainage to prevent flooding, and trimming trees to prevent damage during storms or wildfire.
Inspections can be done on your phone in less than 10 minutes!
These assessment services can be tied to discounts for risk reduction measures to help get the homeowner more involved in taking on a bit of the responsibility. Some insurers already offer discounts or lower premiums to homeowners who take proactive steps to reduce risks. For instance, installing security systems, fire alarms, storm shutters, or reinforcing the roof against wind damage may qualify homeowners for reduced insurance rates.
But there’s often a missing piece that fails to alert the majority of policyholders to these discounts or that they could even qualify, and that is missing education and resources. Insurance companies often provide educational materials, online resources, or workshops to help homeowners understand risks specific to their region and how to mitigate them effectively, but it’s often an afterthought. Quoting and binding is a relatively taxing process in high-risk areas and if education is put on the backburner, homeowners aren’t aware of things they could to do benefit from these programs until it’s too late.
There’s a level of education that goes a step further, and that is encouraging maintenance and upkeep. Regular maintenance of the property is crucial to reducing risks. Insurers may encourage homeowners to keep their properties well-maintained by offering guidance on maintaining roofs, plumbing systems, electrical wiring, and other structural elements. Regular inspections can help identify and address issues before they become more significant problems.
Insurers can also take steps to customize risk, like many E&S insurance companies have started to do for not just commercial lines, but personal property lines as well. This means offering specialized policies tailored to specific risks, such as parametric flood insurance or earthquake insurance for a specific segment of their portfolio. This is where insurers may promote the use of new technologies that help reduce risks, like smart home devices that detect leaks or monitor temperature changes, thereby preventing water damage or fire incidents.
Insurance companies have a vested interest in reducing risks for homeowners since fewer claims lead to more stable insurance markets and affordable premiums. Collaboration between homeowners and insurers in risk reduction efforts helps create safer communities and more resilient properties in the face of potential threats.
