State Farm Not Renewing Policies For Jersey Shore Homeowners

Good evening everyone. Hurricaneville has continued to read articles concerning hurricanes and weather on the internet, and happened to stumble across a very important topic, especially for those in New Jersey. Yesterday, the site took a gander at an article from Newsday in New York that talked about how State Farm Insurance was looking to minimize risk, and decided not to renew home insurance policies for clients that live along the Jersey shoreline. Over the next five years, the insurance company is planning to drop two percent of its customers.

This story is the latest in a series of incidents since Hurricane Katrina’s devastating impact on the Central Gulf coast in August 2005 where insurance companies are trying to minimize risk by either changing homeowner policies, or dropping them completely. And, it is not only limited to the more frequent places such as Texas, Florida, and North Carolina, but it is also for those, who choose to live by the water in places such as the Mid-Atlantic and New England like New Jersey, Massachusetts, and Maine. The situation has not only developed because of Katrina, but also due to the fact that the Northeast is long overdue for a major hurricane, and the population in this part of the world is somewhat apathetic to the possibility of such a scenario happening. Back in 2001, a report by an insurance group indicated that a Category Four Hurricane making landfall in Asbury Park would cause some $52 billion in damage.

Recently, a news article indicated that by 2020, a possible storm scenario could have a hurricane leaving behind some $500 billion in damage, and some fear that price tag could come about with a New York and New England major hurricane event. Even the newly appointed director of the National Hurricane Center in Miami, Florida has indicated some concern about a possible Northeast hurricane scenario. Bill Read stated in an interview that the combination of the lack of such a storm in recent years, densely populated areas, apathy in this part of the world, and that major hurricanes move up the coast very rapidly, leaves a very scary outlook for this part of the world. The insurance companies see this, and don’t want to have to flip the bill for such a scenario, especially in light of 9/11. They are looking to cut down on possible losses, and be able to still function as a business.

As a result, it is imperative that New Jersey gets a Statewide Catastrophe Fund in place as soon as possible. The effort for such a fund began in the summer of 2006 when a bill was introduced in the Garden State’s Assembly. However, the financial situation in the state has become the primary concern, and the fund’s bill was stuck in committee during the last session (2006-2007). However, recently, Hurricaneville was informed by Assemblyman, Patrick Diegnan of South Plainfield and Middlesex County, that the bill was re-introduced for this session, and that Diegnan himself has been asked to be a co-sponsor. Following the model created in Florida back in 1992, NJ’s CAT would be a big boost to coastal residents since insurance companies would be more inclined to stay in the game, and continue providing coverage. While there are some concerns regarding the Florida CAT in light of the present financial crisis and credit crunch, it could be a big plus to have such a fund, especially if the kinks can be worked out to provide a safety net to both the insurance companies and homeowners.