Allstate Walks Away from Catastrophe Home Insurance Coverage

Allstate homeowners insurance

Allstate Insurance has made it clear for some time that the company plans to reduce the Allstate homeowners insurance customer base by eliminating policies and requiring customers to bundle their home insurance with auto coverage.

Now, according to an announcement from the company’s CEO, it plans to move away from catastrophe insurance, which includes the coverage of homes damaged after a natural disaster.

Allstate Homeowners Insurance Drops Catastrophe Coverage

At the Financial Services Conference on Tuesday, Allstate Chairman, President and CEO Tom Wilson explained that, as weather patterns are getting more extreme and catastrophic losses are becoming more difficult to cover, the company is making a stronger effort to walk away from the catastrophe insurance business.

Catastrophe insurance is coverage that protects Allstate homeowners insurance policyholders and businesses against natural disasters, including hurricanes, earthquakes and tornadoes, as well as man-made disasters, such as terrorist attacks.

Allstate acknowledged that, while it has managed to keep Superstorm Sandy claims relatively low, it wants to shrink its exposure to potential claims in the future.

The company has already minimized Allstate homeowners insurance in California, as well as along the Eastern and Gulf Coasts. It has also exited earthquake coverage in all states except Kentucky. In total, Allstate has reduced the number of homes it insures by 1.2 million since 2008.

Securing Cheap Home Insurance

Since the company has started reducing is catastrophe home insurance business, many policies have been sold to reinsurers. Customers who have had their coverage sent to different companies and are in search of cheap home insurance coverage with a difference insurer might consider the following tips:

  • Assess home value properly: Some homeowners are guilty of overvaluing their homes through incorrect overestimation, which results in paying too much for coverage. To ensure you pay the correct amount for coverage, have  a professional assess your home’s value (including rebuilding costs).
  • Shop around: When securing a quote, don’t just stop at one. Be sure to shop around with multiple insurers to make sure the cost of premiums suits your budget.
  • Find a knowledge agent: While you’re shopping around, take time to locate an agent who is highly knowledgeable about cheap home insurance available to you, in addition to exclusions and limitations. You need to understand your premium costs and potential out-of-pockets expenses you may face if underinsured.

If you are with an insurance company has chosen to step away from the home insurance business — or you are looking for change on your own — it’s good to know there are other companies out in the market who are willing to work with you. By taking knowledgeable steps along the way, you’re sure to locate quality coverage you can afford.