Q

Homeowners insurance moratorium: What is it and how can I get covered?

A

A moratorium is when an insurance company stops issuing or updating policies due to the likelihood of a natural disaster, like a hurricane or wildfire.

Logan SachonPat Howard 1600

By

Logan Sachon

Logan Sachon

Insurance Expert

Logan Sachon is an Insurance Expert and Senior Content Marketing Manager at Policygenius. She joined the company in 2018 as an Insurance Editor and has written extensively about insurance and personal finance for the Policygenius website and for the Easy Money by Policygenius weekly newsletter. 

A co-founder of The Billfold, a groundbreaking personal finance site for millennials that was named one of Time's 25 Best Blogs of 2012, she has been writing about personal finance for 12 years and specializes in millennial finance. She has previously held editorial roles at PR Hacker, Manifest, JCK Magazine, Bundle, HomeSpun Websites, and ModelPeople. 

Her work has been published in New York Magazine, Glamour, The Guardian, BuzzFeed, Yahoo Finance, Money Under 30, VICE, The Awl, The Hairpin, and more. She has appeared on WNYC and on podcasts including the Umbrex Unleashed Podcast.

&

Pat Howard

Pat Howard

Property and Casualty Insurance Expert

Pat Howard is a senior editor at Policygenius specializing in property and casualty insurance. His work has been featured on Property Casualty 360, Fatherly, MarketWatch, and more.

Updated March 16, 2021|6 min read

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If your house is at heightened risk of damage from natural disasters, like hurricanes or wildfires, you’ll want to update your homeowners insurance policy every so often to ensure you’re adequately covered. That could mean adjusting your coverage limits so that your house is insured for a full rebuild in the event of a fire, or lowering your policy’s hurricane deductible to an amount you can better afford in the event of tropical storm damage. 

Occasionally, insurance companies impose restrictions on purchasing and updating coverage in the lead-up to a storm or natural disaster. This is referred to as an insurance moratorium, also called a binding restriction or binding prohibition. During hurricane season, insurance companies usually wait until a tropical storm is 24 to 48 hours from impact before declaring a moratorium. Wildfires, riots, and other events can also trigger moratoriums on purchasing insurance or updating policies.

Flood insurance, which is sold by the National Flood Insurance Program, isn’t subject to moratoriums in the lead-up to a storm or flood event, but there is a 30-day waiting period on all new policies. 

Key Takeaways

  • A moratorium is a period of time where an insurance company stops writing new policies or letting existing policyholders make changes to their current coverage

  • Moratoriums are enforced on a company-by-company basis, and are typically triggered by hurricanes, wildfires, earthquakes, and other disasters

  • Moratoriums are generally issued around 24–48 hours in the leadup to a storm

  • If you’re having difficulty obtaining coverage during a moratorium period, consult an independent broker who can help you find an insurer that hasn’t halted business

What is a moratorium?

A moratorium is when an insurance company stops issuing and updating policies because of an impending disaster or weather event — this is the reason why you can’t get or update home insurance before a hurricane. Hurricanes, wildfires, earthquakes, riots and civil commotion, and other catastrophes are all grounds for coverage moratoriums.   

Moratoriums essentially help insurance companies offset the financial risk of insuring homes in disaster-prone areas by not allowing individuals to update or buy coverage based on what the weather forecast looks like. This incentivizes policyholders to keep their homes properly insured when things are good (and at less cost to the insurance company) not just when the weather takes a turn. 

Moratoriums are put into place on a company-by-company basis — they’re not issued at the state- or industry-wide level. Once an insurance company enforces a moratorium in a state or region, the following will apply:  

  • Existing policyholders won’t be able to modify or change the coverage in their policy 

  • Existing policyholders won’t be able to switch insurance companies

  • You won’t be able to purchase insurance through the insurer 

For this reason, it’s a good idea to not wait until hurricane or wildfire season to make changes to your policy or purchase new lines of insurance, otherwise, you could run into a moratorium and be out of luck. 

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How do you know if there’s a moratorium in your area?

It’s common for people to find out about insurance moratoriums after they’ve already applied for insurance. Insurers will then reach out and inform the customer that they’re not eligible for coverage until the threat from the hurricane or other natural disaster has passed. 

“Insurers issue moratoriums that stop new business once a storm’s path is viewed as likely to cause damage,” says Fabio Faschi, Property and Casualty Lead with Policygenius. “A reputable independent agent will be able to see which insurers have halted new business and which haven't, and they'll have more insight as to what areas a storm or hurricane may impact.”

If you’re looking to purchase insurance in the days leading up to a bad storm or natural disaster, look into an independent agent or broker that works with several different companies, like Policygenius. Information about which insurers have issued moratoriums may also be available through your state’s insurance department website. 

How long do moratoriums last?

Insurance companies typically lift moratoriums once the disaster threat has passed. In the event of a hurricane moratorium, the binding restriction would most likely be lifted once the storm has already made landfall and passed through the affected area. An earthquake moratorium, on the other hand, might only be lifted after the last tremor or aftershock has passed, which can often come days after the initial event. 

States with the most hurricanes

If you live in any of the following hurricane-prone states, it’s especially important to make any changes to your homeowners insurance or switch policies in advance of hurricane season. 

StateMajor hurricanes (1851-2018)Total hurricanes (1851-2018)
Florida37120
Texas1964
North Carolina757
Louisiana1755
South Carolina530

How to prepare your house for a storm during a moratorium

Storm-proof your home

The good news is there are things that you can do to protect yourself and your property even if you don’t have insurance, or don’t have as much as you want.

In the days leading up to the storm, securing your home is the most important thing you can do, especially after insurance companies have instituted moratoriums. In fact, these are the same preparations that you should make even if you do have adequate insurance coverage.  

The Insurance Information Institute (III) recommends that homeowners take several steps in the weeks and months leading up hurricane season. Obviously not all of these can be done once a storm is bearing down, but by doing as much as you can, you can protect your property:

  1. Trim branches and trees

  2. Secure outdoor furniture, trash cans, flower-pots — anything not tied down can become a projectile

  3. Install storm shutters or fit plywood panels over windows and sliding glass doors

  4. Ensure garage doors are approved for wind pressure and impact; if not, install new doors

  5. Ensure exterior doors have at least three hinges and a one-inch deadbolt

  6. Seal outside wall openings, like vents, outdoor outlets, or other locations where pipes or cables go through the wall

  7. Clean gutters and direct downspouts to facilitate water drainage away from your home

Make homeowners insurance preparations

Once your home is secure, there are two things you can do to make the homeowners insurance claims process easier, should your home sustain damage and you need to file a claim.

1. Update your home inventory

Make sure you have an updated home inventory. If you’re short on time, it can be as simple as taking a video of all your possessions and the current condition of your home. Having this reference will make the claims process smoother for you and your insurance company, should you need to file a claim.

2. Understand your homeowners insurance policy

Your policy declarations page is a great refresher on what your policy coverage entails in addition to information like your deductible amount. 

Many insurance policies, especially for homeowners in coastal states, have separate deductibles for hurricane or windstorm damage. These deductibles, instead of being a dollar amount, will be a percentage of the insured value of your home — usually 1% to 5%. If you have a separate hurricane or windstorm deductible, it will be listed on your declarations page.

Your declarations page will also have information on what to do if you need to file a claim.

What to do after a hurricane 

After the storm hits, be sure to take the following steps: 

1. Document the damage

Once you and your family are safe and the storm has passed, it’s important to document the damage with photos or video before you attempt to clean anything up.

2. Document expenses

Depending your policy and the damage, you may be able to get reimbursed for evacuation costs if your home is damaged. Keep receipts so you can make a claim.

3. File a claim

After a natural disaster, it’s especially important to file a claim with your insurance company in a timely and efficient manner. Your insurer will most likely be bombarded with claims in the aftermath of a big storm, so be sure to gather documentation and evidence of the loss as soon as you’re capable of doing so. 

4. Be prepared for next time

Once the storm has passed, it’s time to start preparing for the next one, which means talking to an insurance agent about either getting covered or increasing your coverage limits. Moratoriums are often lifted in the days after the storm has passed, though some insurers wait even longer to start writing new policies. Talk to your agent about whether it’s possible to purchase insurance.

“You can buy insurance once the moratorium is lifted by the individual insurers,” says Faschi. “If you received a certain rate prior to the storm, you may not be eligible for the same rate.”