Archive for Hard-To-Place Risks
Automobile Nonstandard Liability
Many motorists find obtaining automobile liability insurance with standard carriers at regular rates difficult or impossible because of their age, occupation, driving habits, moral habits, and other issues . Over the years, many well-managed standard carriers have entered into or increased their nonstandard automobile insurance writings. These companies readily insure eligible drivers who have been declined, cancelled, or refused coverage at standard rates. This coverage is written at surcharged rates usually based on the insured’s accident and driving violation conviction record. The insurance company considers a number of factors when it decides whether or not to write this coverage in a given state or locality.
Automobile Nonstandard Physical Damage
Motorists who cannot find comprehensive and collision insurance coverages with standard markets at regular rates must obtain them through specialty markets at surcharged rates. The same companies that offer nonstandard liability coverage usually also offer physical damage coverage. Physical damage coverage on high-powered sports cars, automobiles equipped for racing, specially equipped automobiles, and automobiles with fiberglass bodies is especially hard to place.
Property insurance coverage for residential and commercial properties in coastal areas often does not cover windstorms. Varieties of cooperative programs are available through state wind plans but some private carriers are available to provide this needed coverage. All coastal windstorm policies are subject to large deductibles, either as a flat amount or as a percentage of the limit of insurance. Flood coverage is also needed and available through FEMA’s National Flood Insurance Plan (NFIP) as well as private carriers. Because the NFIP limits are often inadequate, excess coverage or policies through the Natural Catastrophe Insurance Program (NCIP) which write in place of or above those limits is available.
Dangerous Dog Liability Insurance
Certain breeds of dogs are categorized as dangerous and are subject to stringent state or local regulations. Many standard homeowners markets exclude or restrict coverage for these breeds. Because certain regulations now require liability insurance coverage for these breeds, the owners are being forced to either relinquish their pets or not comply with the regulations. This coverage provides an alternative.
Homeowners Policies: Low-Value and Nonstandard
Specialty carriers have developed homeowners and tenants package policies for low-value and nonstandard dwelling risks in distressed areas to counter competition from urban area or statewide Fair Access to Insurance Requirements (FAIR) Plans. FAIR Plans do not offer “package” coverage on residential property. Property coverage is usually written on a named peril basis and is combined with personal liability in a single policy. Deductibles are mandatory. Premiums charged are higher than in the standard market and some policies are written under various state consent-to-rate requirements.
Substandard and Low-Valued Dwelling Fire Insurance
It is difficult to place fire and allied lines insurance on dwellings, apartment houses, and tenements in poor condition or in high-crime urban areas. Most insurers decline low-valued properties because the cost to issue such policies may exceed the premium available. FAIR plans handle dwellings and tenements, particularly in urban areas, but usually not low-valued dwellings and eligible properties in rural areas.
Substandard Businessowners Policy (BOP)
Businessowners policies are package policies for small businesses that provide more coverage enhancements than monoline coverage forms. Eligibility requirements vary based on the type of risk and the specific carrier’s underwriting appetite.
Substandard Crime Insurance
Many mercantile risks, such as bars, taverns, liquor stores, drug stores, and gasoline stations may not be able to purchase burglary and robbery coverages in the standard market, especially if they are located in urban areas. Markets that implement rate surcharges are available for operations that are good moral risks, take certain precautions against burglary and robbery, and can pay several times the manual rate.
Substandard Fire (Commercial)
Agents and brokers find it particularly difficult to place substandard fire insurance. Commercial risk placement difficulties may be due to the fact that the property values are low, it is a prohibited class of business, or the occupancy or hazards make the risk a poor one to accept at the rates usually charged. Most, if not all, substandard fire insurance business written on commercial properties is placed in non-admitted markets at rates above the standard rates. While some commercial properties are written in Fair Access to Insurance Requirements (FAIR) plans, the surcharged market still handles lines not written in these plans or writes excess coverage over FAIR plan limits. This class is underwritten very closely and is usually accepted by domestic companies on an accommodation basis only.
Substandard General Liability
The Insurance Marketplace lists available markets for a number of specialty, unusual, or difficult-to-place commercial general liability exposures. Because not every exposure and coverage need can be listed or anticipated, this classification is for any nonstandard and difficult-to-place commercial general liability exposures not specifically listed.
Substandard Malpractice and Professional Liability
The Insurance Marketplace lists available markets for a number of specialty, unusual, or difficult-to-place malpractice and professional liability exposures. Because not every exposure and coverage need can be listed or anticipated, this classification is for any nonstandard and difficult-to-place malpractice and professional liability exposures not specifically listed.
Substandard Package Policies
Businesses that do not qualify for coverage in the standard market still want the convenience of coverage written on a package basis. The specialty marketplace offers a number of these programs for such insureds.