Insurance companies are abandoning disaster-prone areas — What does this mean for residents?


If you live in an area that is prone to natural disasters, you may have been told that you possess uninsurable property. Many insurance companies are deciding to stop covering areas in the U.S. that have an abnormally high exposure to natural disasters, which can make it difficult to find affordable coverage. You may want to consider purchasing a Fair Access to Insurance Requirements (FAIR) plan if you cannot find coverage from other companies.

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Written by
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Reviewed by
Farmers CSR for 4 Years
UPDATED: 2022-07-22T11:21:04.222Z
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What You Should Know

  • Insurance companies often stop issuing policies in the wake of natural disasters
  • Living in a disaster-prone area can make insurance difficult to find and much more expensive
  • If you are unable to get coverage with an insurance company, you may want to consider a Fair Access to Insurance Requirements (FAIR) plan.

FedNat Holding Company, which is the fourth-largest insurance company for homeowners policies in Louisiana, said it would no longer renew its policies because of hurricane-related losses spanning the past 18 months.

Sadly, FedNat is not the only company to make this type of decision. Many insurance companies have had to stop issuing certain policies — or stop issuing policies altogether — because of natural disasters in certain areas.

These types of decisions about uninsurable property due to natural disasters can be devastating for people who are searching for a policy or who have a policy with a company that has decided not to renew.

How does FedNat’s decision impact other disaster-prone areas?

The most obvious way that FedNat's decision will impact other areas is through cost. In the wake of natural disasters, many insurance companies may either increase their rates or decline coverage.

If you live in an area with a lot of hurricanes, earthquakes, floods, or tornadoes, you may find that your homeowners insurance premiums increase over time.

You may also have to shop around for new coverage because your old company no longer offers policies in your area. You can shop around online for new rates, but don't be surprised if the quotes you get are higher than what you used to pay.

What if my insurance decides not to renew because of a natural disaster?

If you have a homeowners insurance policy with a company that decides not to renew, you will have to find a new homeowners insurance company to cover your property. This may be easy to do, but it will depend on where you live and the options you have available.

In many disaster-prone areas, certain towns or provinces are sometimes considered uninsurable property. This essentially means that the area is too risky for an insurance company because there are so many occurrences of natural disasters.

After you shop around for coverage, if you find that there really aren't any options, you may want to consider a Fair Access to Insurance Requirements (FAIR) plan.

FAIR plans were put in place to make insurance available in areas that have abnormally high exposure to risks outside of anyone's control. FAIR plans are often more expensive and may offer less coverage than a company in the volunteer market.

Before you make any final decisions about your insurance coverage, be sure to shop around for rates and coverage options online.

You can use our free quote tool below to find and compare homeowners insurance rates in your area today.

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