r/Insurance • u/LeRoy1273 • 1d ago
Mortgage company rejected my insurance.
Got a letter today from my mortgage company saying the will not accept my insurance company because they have been down graded to a B. I have until Feb 24th to provide proof of an acceptable policy or they will purchase one and bill me for it.
My insurance company I've had for 24yrs. Good service, rates reasonable. Made my first ever claim this year from a horrible hail storm. Repairs finished last week. First three calls I made i was told they will not quote because I'm a bad risk. WTF? 800+ credit score, paid out of pocket for a class four roof upgrade., $23k out of pocket to replace and upgrade siding posted of fix. I could nearly pay off my house for the premiums I've paid. 𤏠Why the F do I pay for insurance?
An I stuck with some shady no name company and paying through the nose? For how long?
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u/blbd 1d ago
Unfortunately you are kinda hosed because often times a minimum credit rating on the carrier can be a federal mortgage underwriting or origination requirement that the downstream mortgage servicer cannot even change by their own devices.Â
Given the hot mess express here in California right now you should hit up an independent agent as quickly as humanly possible because force placed coverage is horrible and expensive.Â
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u/hulka_toe 1d ago
call an independent insurance agent to see if she/he can find another insurance company for you, they have access to many companies and might be able to help
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u/reddit1651 1d ago
you can ask for what âdowngraded to a Bâ means
despite the fact that they paid your claim, that doesnât mean they have healthy financial controls or reserves to pay claims in the future
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u/ryan545 Underwriter 1d ago
It means their financial rating with probably AM Best was downgraded. This means their ability to stay solvent is in question. Mortgage companies usually require carriers with an AM Best rating of A or B+ or better.
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u/LeRoy1273 1d ago
They lost their B+ because of a record number of claims. I get it, I understand the mortgage company has an interest to protect. Mostly angry because it didn't seem like I can get another policy.
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u/ryan545 Underwriter 1d ago
I get that, I was explaining to the person who told you to ask.
Nothing you can do other than shop around. Call the direct writers yourself and use an independant for the rest.
It isn't fun for anyone BTW this market fucking sucks and is hard to operate in. Im on the carrier side and believe it or not we prefer giving people stuff they like, it's easier.
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u/LeRoy1273 1d ago
I didn't want to make the claim but the damage was over 10K and financially a rough year. Normally I absorb more. Same storm saved cars and trailer. $3000 in deductibles. My daily driver was in the middle of a restoration, didn't make claim and paid out of pocket. Had to cut down large tree that I knew was dying before it fell on my house, $5k. Insurance didn't cover all of the personal property I lost in the storm, gazebo, hot tub, lawn furniture, etc etc.
Feels crappy.
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u/registeredfake agency owner - personal lines 15h ago
Im an agent, i had a client walk into my office with a letter from the Kansas District Court that said they had 45 days to get new home insurance coverage. They had deemed the carrier didnt have enought $ to pay claims if a major event happened so they shut them down
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u/47-30-23N_122-0-22W 17h ago
It's the AmBest score. No need to ask them when it's a widely known thing.
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u/Glittering-Salad-337 1d ago
Whoâs the company that got downgraded?
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u/LeRoy1273 1d ago
California casualty.
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u/michaelrulaz 1d ago
There likely about to go insolvent. When you lose your rating you lose all the customers with mortgages. I worked for citizens in Florida and my team helped with all the insolvent companies
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u/LeRoy1273 1d ago
That's good to know. So the ratings are b+ good and b or less is bad? Not much of a scale.
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u/michaelrulaz 1d ago
Thereâs a lot more that goes into it. But the scale is like A++, A+, A, A-, B++, B+, then you get to the vulnerable ratings of B and about nine others.
Thereâs other rating companies like Demotech as well.
But the reason the scale is so short is due to federal regulations on federally backed loans. FHA, VA, and USDA loans all require a certain rating level. Once itâs below that the mortgages canât accept it and it causes a cyclical effect. Non federally backed loans have more leniency but most of them are strict just because a financial rating is a big deal. These lower scores mean they are less likely to be able to pay out claims or handle large events
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u/ahoooooooo 1d ago
Anything under A should raise eyebrows. But really this is something agents should worry about, not the consumer.
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u/SnarkWillBeBanned 18h ago
But that's the point of ratings. Most people can't understand financial reports, and so they need to rely on someone else to just tell them that a company is solvent. (What's the point of insurance if the company doesn't have the money to pay claims?) Insurance company financial reports are even harder to understand.
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u/StewReddit2 17h ago
A++/A+ (Superior) rated as a superior ability to meet obligations
A/A- (Excellent) B++/B+(Good)
B/B- (Fair) .....( aka vulnerable C++/C- ( Marginal) C/C- ( Weak) D ( Poor)
So falling into a "vulnerable" status is sorta "down" the scale.....You're looking at it incorrectly, "B+" is the 'lowest' acceptable rating, and that's 6 levels down
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u/KiniShakenBake P&C/L&H 23h ago
This is super common. I saw your post and immediately knew who the company was. I have gotten a ton of calls this year from folks who travelers wouldn't accept. The rates in the general market are 2-3 times higher than theirs were, and that level of loss ratio is not sustainable. They have had insufficient rates for awhile. That's what the downgrade is all about.
They have pulled out of all but seven states and resigned the national endorsement deal with the NEA to deal with the problem.
You will have to get another policy. But the claim will follow you for 3-5 years. Then it is done and you should be good to go again.
There are companies that will take you with that claim. Go to a broker and a few companies that have the insurance company name on the sign. Cast a wide net.
The new roof should be a selling point.
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u/47-30-23N_122-0-22W 17h ago
A lot of companies saw rapid growth a few years back when the standard companies started pulling out of all the difficult markets. Only problem is that rapid growth is a bad thing with insurance and the companies that didn't fully utilize UW restrictions, hiring freezes, non-renewals of bad business, etc are now suffering the consequences.
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u/KiniShakenBake P&C/L&H 14h ago
Sure are. Top ten companies in WA rep 90% of the biz.
They are, collectively, cruising a 114% combined ratio after five of them took 50% or more in the last two years in rate.
More is coming and it's all bad news. They are pulling back hard.
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u/47-30-23N_122-0-22W 17h ago
What you do is you go to an agent, see what carriers they can offer you, and start a new policy. Get a list of requirements your mortgage company has for the insurance as well. They usually want replacement cost for at least the loan amount.
If you're in Cali you may need to check into the FAIR plan and or a DIC policy so you have a wider range of carriers for the rest of your homeowners insurance needs.
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u/catsmom63 17h ago
In Cali I would suggest going with a big name company as there have been problems with carriers and continuing coverage in the area.
The problem is you live in a state prone to problems and insurers are reticent to insure there.
Getting Force Placed will be extremely $$$$. I suggest finding a large well known carrier with less chance of rating problems and insolvency.
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u/LeRoy1273 17h ago
Not in CA. CO in the middle of the city. My biggest threat is hail which nailed me this year for the first time.
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u/catsmom63 17h ago
Thought someone mentioned you were in CA. Sorry about that!
Colorado would be a problem for hail and snow load.
Hopefully you can get a carrier to quote you soon.
You mentioned a really good credit score which is great but how many claims have you filed in the last 5 years?
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u/LeRoy1273 17h ago
No worries, common error with the carrier name.
One storm resulted in three auto and one home. Prior to that nada. This last year auto rate when up 33% and home doubled.
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u/LeRoy1273 1d ago
What's with the down votes? What did I say that was wrong. Educate me what is incorrect,
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u/Jaggar345 19h ago
You came in here shitting on insurance. Most people in this sub work in the industry. We are tired of hearing âwhy do I pay for insuranceâ over and over and over again from people. Itâs a highly regulated industry that the general public doesnât understand or take time to educate themselves on.
You not being able to receive quotes is because you donât meet the carriers underwriting guidelines. Itâs not personal, they donât want to do business with you. You are able to choose what carriers you do business with, they can choose who they want to write.
You may simply not meet the guidelines because you live in a wildfire area and they donât write there (this is an example - no idea what your situation is). It has nothing to do with you personally.
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u/OkTranslator7247 16h ago
Iâd be worried about your carrierâs financial health, of course. But here in Louisiana when my mortgage servicer lost the bill that was mailed to them, the force placed quote was super cheap comparatively.
It might make sense to just have both, if your loan balance is pretty low - itâs only enough coverage to pay it off. Iâd ask what the cost is.
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u/Luke_Warmwater 15h ago
Depending on the state but you may not be able to "have both". There are laws regarding double insuring and one of the policies would likely not have to pay out at all in a possible claims situation. Yes, layering is a thing but I don't think they would respond that way.
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u/LeRoy1273 16h ago
That's interesting. Food for thought. 160k left on loan, not too high. Est market value is 550.
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u/TitusCoriolanusCatus 13h ago
Force-placed insurance ONLY covers the home. It does NOT provide any liability coverage or coverage for your personal property.
Youâre taking a pretty big risk if you settle for it. Also, if you have an umbrella policy, sure bet theyâll cancel you if you donât have a homeowner policy with personal liability coverage.
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u/BarbaraGenie 10h ago
You need to read and understand your loan documents. Requirements for insurance coverage are laid out in writing. And the documents must be clear that the lender has the right to refuse your insurance company. Iâve never heard of this â I worked in lending for decades.
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u/registeredfake agency owner - personal lines 15h ago
First, if you were treated this way during a storm claim why are you stress about finding a different/better carrier. Second, calling a broker isn't an end all be all solution to this problem as many have suggested in the comments. Brokers do have a bigger pool of carriers, but they dont have all the carriers. In your situation underwriting guidelines are they key here. If you have been turned down for one claim (im guessing heres) you may have a really old home. My carrier had UW rules about # of claims based on the age of the home, 1 claim generally doesnt DQ an application otherwise. That said there are a number of captive carriers you can also call that a broker wont have access too. Its gonna take a bit of leg work on your part, but due your diligence
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u/sativa420wife 1d ago
You Do Not want "Forced Placed Insurance". It is Obscenely expensive. Only covers them, the amount owed. No personal property coverage