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KHOU News Says Allstate Is Dropping Insurance?


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My wife and I have been looking at buying/building in the Heights area, and we saw on last night's KHOU broadcast that Allstate is dropping thousands of homeowners. It said it was due to wood frame housing/wood siding.

Does anyone else know anything more about this? We really liked the look of the victorians and character in the neighborhood, and don't want a brick box McMansion. My wife is worried we won't be able to get insurance unless it is the horribly expensive kind. Any ideas?

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My wife and I have been looking at buying/building in the Heights area, and we saw on last night's KHOU broadcast that Allstate is dropping thousands of homeowners. It said it was due to wood frame housing/wood siding.

Does anyone else know anything more about this? We really liked the look of the victorians and character in the neighborhood, and don't want a brick box McMansion. My wife is worried we won't be able to get insurance unless it is the horribly expensive kind. Any ideas?

doubt it is because of wood frames. almost all homes are built that way.

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I wouldn't be surprised. As much as I like Allstate, it's had a lot of problems in recent years.

I was an Allstate (auto) customer when I was in New Jersey. When the state legislature passed an insurance reform law, Allstate pulled out of the state in protest. Strangely, all the other insurance companies were able to comply with the law, but Allstate decided to make a stink about it. It's their right, and I applaud the execs for taking such a strong stand, but it's just a really weird thing for a huge company to do.

I just did a quick Google News search, and it looks like something similar is happening in California. According to KGO-TV:

Allstate, California's third-largest home insurer, is backing away from writing homeowners policies. Allstate claims the combination of high housing costs and all-too-frequent natural disasters is just too much for it to handle anymore. The very big insurance company is telling state homeowners to go pound sand and some believe it's all part of a very calculated bluff.
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Thanks for bringing this up. I talked to my Allstate agent a month or so ago and he was crying the blues that he was going to probably lose his business because he was being forced to drop so many homeowners. I don't remember all the particulars, but he said the wood framing issue dealt with what percentage of the house was wood, and since ours was mostly all brick, we didn't have to worry. I'm going to pull out the paperwork and re-read it though, just to be sure. Yeah, there are a LOT of changes happening in the insurance business that will affect all of us in the Houston area. One report I haven't had time to sort through yet that you might find interesting:

Wharton report

Hurricanes Katrina and Rita were just the beginning of some of these changes.

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Homeowners insurance is becoming more and more useless. Most water damage isnt covered anymore so what is the problem with wood? That fact that it might blow off in a hurricane? Instead of dropping coverage on so many things why don't they just limit the liability? Seems like the only thing insurance is good for is if your house burns to the ground.

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My wife and I have been looking at buying/building in the Heights area, and we saw on last night's KHOU broadcast that Allstate is dropping thousands of homeowners.

I think what you heard was another report about Allstate and other insurance companies' decision to stop selling homeowners insurance in areas right along the immediate coast, and not renew existing policies in those areas. That's old news. In fact, here's a story about it in the Houston Chronicle from last year.

Sept. 15, 2006

Insurer to end some policies on coast

State Farm Lloyds says 6,000 Texas customers won't be covered

Thousands of State Farm Lloyds customers along the coast will lose their property insurance starting next year.

The state's largest insurer said Thursday it plans to not renew 6,000 personal and commercial policies on properties within 2,500 feet of coastal waters or bays, on a barrier island or peninsula.

That means nonrenewals for about 780 policies in Harris County and 3,200 policies in Galveston County, according to company spokeswoman Sophie Harbert.

"Reducing our waterfront exposure will allow State Farm to meet the needs of more customers elsewhere in the coastal market that we might not otherwise be able to write at all," Harbert said.

Consumers can shop around for new insurance, but many may be forced to find windstorm insurance with the state wind pool.

State Farm also plans to not renew about 70 apartment and condo association policies on properties east of U.S. 59 and Texas 288 in Harris County. Those policies are concentrated in Southeast Houston, but Harbert could not say how far north the nonrenewals would extend.

The company has about 230 apartment or condo association policies in Harris County.

State insurance regulators, who are butting heads with the company in court over its homeowner rates, said they would give the move close scrutiny.

"Somebody's got to look out for all the homeowners," Jim Hurley, a spokesman for the department, said.

The move comes as more companies are cutting back how much they insure along the coast and as condo associations and apartment complexes in the Houston area face scarce and more costly coverage.

Some condo owners in southern Harris County will ask regulators at a hearing in Austin on Tuesday to expand the state windstorm association into their area.

The Texas Windstorm Insurance Association, which tends to have lower rates for windstorm coverage, sells only to residents in coastal counties and a sliver of Harris County. If its coverage area is expanded, the association may be able to pick up the wind coverage State Farm drops.

But the association and insurance industry oppose an expansion because, they say, it would only compound problems for the woefully underfunded association.

Allstate Texas Lloyds, the state's second-largest home insurer, said earlier this year that it would drop wind coverage upon renewal of some 65,000 homeowner policies along the coast and not renew about 16,000 nonbrick homes in counties once removed from the coast.

Several smaller insurance companies also said they would cut coverage along the coast this year.

State Farm will continue to sell new home insurance and windstorm coverage for homes more than a mile inland in coastal counties, but homes will have to meet certain new requirements, including obtaining a building code certificate from the Texas Windstorm Insurance Association.

Customers with homes between the 2,500-foot mark and a mile will be able to renew, but the company will not sell new policies.

The requirement won't apply to its renewal business, but State Farm Lloyds hopes it will encourage greater use of and more enforcement of building codes along the coast, Harbert said.

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I'm in the insurance biz (not Allstate) and yes, it is true, Allstate is dropping all wood frame and stucco homes in Tier 2 counties. Tier 1 is along the coast, Tier 2 is Harris county, and all the counties once removed from the coastline. The general thinking from them anyway, is that they used to believe all homes North of I-10 were safe from Hurricane wind damage. After Katrina and Rita, they had a change of heart and will start non renewing the wood frame and stucco homes here in Houston (and mobile homes as well).

This is a major change for an insurance company but doubtful to be repeated by others. It has more to do with Allstate's financial standings than anything else. Instead the new trend is for larger deductibles for tropical storms and hurricanes. For example, if you have a $1000 deductible now for all types of losses, they will instead change you to 2% or 3% for Tropical Storm and Hurricane related damage. You'll still have the $1000 ded for all other losses, but the higher ded for these types of storms.

So if you're house is insured for $200,000, instead of the $1000 ded you used to have, if a tropical type storm hits your house and damages it, you'd have a $4000 deductible (2%) or $6000 (3%).

They have all sorts of names for it, "Tropical Cyclone Deductible", "Hurricane Deductible", or even "Named Storm Deductible". Just make sure you ask!

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I think what you heard was another report about Allstate and other insurance companies' decision to stop selling homeowners insurance in areas right along the immediate coast, and not renew existing policies in those areas.

Allstate is dropping almost 27,000 customers. As usual, your information is bogus. We knew months ago our 89 year old all wood principle residence in Sunset Heights-which is more than 50 miles from the coast-would no longer be eligible for Allstate insurance. So we cancelled ALL our insurance coverage with Allstate: one passenger vehicle; 2 trucks; 2 tractors; one boat and 9 rental properties. When our agent contacted us about our cancelation I told him in the end all Allstate has done is screw him and themselves. We're not in buisness for them-we hired them to be in buisness for us. They chose not to be so we chose to go elsewhere-and have gotten a far better insurance package-except for the boat which we gave to one of our nephews. :rolleyes: So Filio,

I think what you heard
about nine months ago was intended for people that take on face value the word of a gang of thugs. We choose to use our brains and anticipate what this gang of thugs would do. They proved us correct. As for you, kidnap a clue.
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As usual, your information is bogus. As for you, kidnap a clue.

Say what? Hey don't blame me. You're shooting the messenger. I said nothing about anything in this discussion. I only dug up the Chronicle article about what Allstate and other insurers are doing.

The article from last September said Allstate would stop selling homeowners insurance in coastal counties, and would not renew policies on wood and stucco homes in the second tier counties. That's what KHOU breathlessly reported the other day as "new news".

If there is anything in that article that is not true or accurate, we would appreciate it if you would share your unique insight with the rest of us.

As usual, you're shooting your mouth off for the wrong reason, and blaming the wrong person. There are plenty of good reasons to avoid doing business with Allstate, but don't take your hatred of Allstate out on me.

Edited by FilioScotia
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I was with State Farm for years until they annoyed me for the last time. I've been a long member of AAA and never considered their insurance until a couple of years ago. Now I have everything thru them...MUCH cheaper than anything I've found elsewhere. I just bought a place in the Heights in December, wood frame, wood exterior, and got no problems with insurance from them.

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