Hurricanes? Not In My Backyard, Say Homeowners

Homeowners have failed to strengthen their homes against weather threats, despite cancellation of insurance coverage, out of a misplaced belief they are not vulnerable, according to a researcher.

For the most part, people simply do not think "anything will happen to them," said Madelyn Flannagan, vice president of education research at the Independent Insurance Agents & Brokers of America.

IIABA did a recent study that found three million households have lost their homeowners coverage since 2003, including residents affected by Hurricane Katrina. But most homeowners have done nothing to protect their home against future natural disasters.

"They don't think they need to do anything. In some cases it can be the insurance company being a problem, but 95 percent of the time people simply don't think anything will happen," said Ms. Flannagan.

Of the three million homeowners who lost coverage and did nothing to structurally reinforce their homes, 2.1 million live in the southern portion of the nation, according to IIABA.

Stuart Powell, vice president of insurance operations for IIABA in North Carolina, said it's also a cost issue.

"As deductibles climb, people don't want to pay the cost for coverage," said Mr. Powell.

There needs to be a "change in mindset from people." Although property rates are high in the Southern United States, when homes are built, they need to be protected, he added.

Thirty-five percent of all American households, according to the IIABA survey, said their homeowners insurance rate increased in the last 48 months. Forty percent of the respondents said they had a rate increase of up to 10 percent. Twenty-two percent of respondent said their insurance rates had increased 11-to-25 percent, and 13 percent of households increased more than 25 percent.