Colorado Springs

Homeowners receive non-renewal letters after repeat hail claims

Homeowners losing insurance due to hail claims

COLORADO SPRINGS, Co. - Colorado currently ranks #2 in the nation when it comes to hail claims, recently taking on the label "Hail Alley".

The Pikes Peak region saw a catastrophic storm in 2016, two more in 2018, and a few smaller storms in between.

As a result, more and more people are receiving letters from their insurance companies notifying them their coverage will not be renewed, leaving them asking whether the move is legal and what other options might be left for them.

Homeowners Maurice Cutting and Gerald Janis were among the thousands who filed claims for hail damage in 2016 and 2018, as well as wind damage in January of 2017.

Janis, who lives just north of Fort Carson, made his claims with USAA.

Cutting, who lives closer to the Colorado Springs airport, was insured by American Family.

A few months after their latest roof replacement, both received similar non-renewal letters saying their coverage would soon be discontinued.

Both had the same reaction.

"It's not my fault hail falls out of the sky and the wind blows," said Cutting.

"You're talking storm damage that is not my fault, and it's an act of God or mother nature," said Janis.

They both unsuccessfully tried to shop around.

"I went to some other big name places, and they wouldn't touch me," recalled Cutting.

"They wouldn't even talk to me, because of my claims history," added Janis.

Carole Walker, Executive Director of the Rocky Mountain Insurance Information Association, says insurance companies have to manage their risk.

According to the Association, 8,648 homeowners, primarily in Fountain, filed claims from the June 2018 storm.

Another 6,000 property claims resulted from the storm in August 2018 that rolled through parts of Colorado Springs and Security-Widefield.

Two years ago, more than 33,000 claims resulted from a hail storm that rolled through almost the same area.

However, Walker explained it's not where you live that leads to non-renewal as much as it is the frequency of claims you make.

"Yes, they're looking at both the property risk, the catastrophe risk, the square footage of the home and the construction of the home, but they're also looking at you, that individual," she explained.  "Are you filing multiple claims?  Have you become a higher risk individual that fits outside of what they're willing to take on for risk?"

Both Cutting and Janis filed at least three claims in three years.

The normal filing rate for home policies is 1 every 10-11 years.

However, Colorado Division of Insurance Communications Manager Vincent Plymell says there's no magic number that dictates whether you pose too high of a risk.

It's a culmination of a variety of individual factors.

Plymell says Colorado statutes require insurance companies to notify homeowners of a non-renewal at least 30 days before the policy ends, but the only thing companies need to justify a non-renewal is a history of claims.

As long as the history is outlined in the letter to the homeowner, the non-renewal is almost impossible to overturn.

Janis, who was with USAA for more than 20 years, doesn't agree with the practice.

"Especially retired people, retired military people who've been with them for that long, there should be some way that they (companies) should be able to manage that," he said.

Cutting plans to speak to lawmakers representing his area to push for better regulations on the insurance industry that would prevent non-renewals for naturally-occuring events.

Janis and Cutting did find new policies, but with lesser-known high-risk carriers, and their policies came with higher premiums as well as higher deductibles.

Both Plymell and Walker point out that the insurance market in Colorado is still healthy, and homeowners who lose coverage from their initial provider should be able to find coverage elsewhere, but they admit that it might be in a higher risk category and come at a significantly higher cost.

That cost is anywhere from a few hundred dollars more per year to over a thousand dollars more per year, depending on the size and value of the property.

Plymell encourages anyone with questions about a non-renewal to contact the Division of Insurance and get answers at no cost.

He and Walker also recommend homeowners to carefully consider filing a claim if the cost of repairing a home from wind or hail is not much more than the dedictible.

Filing a claim may save a few hundred dollars out of pocket for the repairs, but a series of claims leading to non-renewal could cost a lot more in the years that follow.

It's unclear how many homeowners in El Paso County have already received a non-renewal letter, or will receive one, but that number is growing as more and more policies come up for renewals.

Although USAA and American Family both referred KRDO to the RMIIA for interviews, each did have an additional response.

Ken Muth, Media Relations director for American Family, said 98% of policyholders in Colorado were renewed, and of the 2% that were not, only a portion of those policies were discontinued for weather-related reasons.

Muth described non-renewal letters as "very rare".

A representative of USAA in San Antonio emailed KRDO the following response: "At USAA we value the relationships with our members and have an industry-leading retention rates. However, there are times when we have to make the decision to cancel or non-renew a member's insurance policy. This decision is never easy and is only done after careful review of the individual factors such as the number of claims, severity and types of incidents. In the rare circumstances when we reach this type of decision, we work with our members to provide additional options to ensure that they are adequately covered."

Janis confirmed that his USAA agent referred him to another carrier, though it was not nearly as affordable.


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