State Farm, Travelers Not Renewing Policies in West Cape May

WEST CAPE MAY – Homeowners here have received letters from State Farm and Travelers insurance companies informing them will not be renewing their policies.
They will no longer have coverage due to the high risk for hurricane damage.
Gordon Hicks, broker and an owner of Mossbrook and Hicks Insurance Agency of Court House, told the Herald that Travelers Insurance began dropping homeowner’s coverage in West Cape May in the past eight to 10 months.
The problem is proximity to the ocean and the amount of losses suffered from Hurricane Katrina and other storms in the southern half of the nation. He said Hurricane Katrina put a number of insurance companies out of business.
Hicks said Travelers looked at the possibility of a hurricane of that magnitude hitting the northeastern U.S. that would do damage that exceeded Katrina and “greatly jeopardize their strength as a company.” He said there is coverage available for those who are dropped but it is not from most major insurance companies.
“The majority of business that is being non-renewed is having to go to what we call the excess market,” said Hicks. “The excess market is your Lloyds of London, your Scottsdale, these are companies that come in to play to write the risk that the regular companies don’t want.”
He said the premium for those companies is generally double what the previous coverage cost.
Hicks said non-renewal of polices could also take place in Cape May, the Wildwoods and other barrier island cities and possibly in Villas for bay side properties.
If you live in a town such as Court House, one that is one to two miles from the water, you have less risk of not being renewed by your insurance company, he said.
Homeowners insurance does not cover flood damage. Property owners must purchase federal flood insurance each year. A West Cape May homeowner told the Herald her federal flood insurance premium for this year was $1,500.
State Farm Agent Rob Gleason, of Rio Grande, said policyholders received 60 days notice of non-renewals. He referred the Herald to State Farm’s Public Relations Department.
Gleason said he could find other homeowners coverage for those who are not renewed through New Jersey Insurance Underwriters Association (NJIUA) which is an association created by the Legislature of New Jersey in 1968 to provide essential property insurance to any person unable to obtain insurance from a voluntary company.
According to their Web site, NJIUA has a program entitled the Windstorm Market Assistance Program (WindMAP) which is a network of insurance companies, agents and brokers acting on a voluntary basis to assist qualified applicants located in coastal areas of New Jersey in obtaining homeowner’s insurance coverage.
To qualify, the residential property must be located in one of 116 coastal region zip codes. The application must show that a prior homeowners insurance policy had been canceled or non-renewed, or the property was newly acquired, or it was previously insured by NJIUA.
Towns eligible for coverage include Cape May, the Wildwoods, Stone Harbor, Sea Isle City, Ocean City and Villas.
The WindMAP is a voluntary industry program operating under a Plan of Operations approved by the New Jersey State Department of banking and insurance.