The volatility of storm losses year after year has resulted in many homeowners struggling to find coverage for their property risks—particularly CAT risks. Today’s standard Homeowners’ Insurance policy does not cover every potential peril, which can leave personal property exposed to risks like wildfires, earthquakes, and floods.
The Excess and Surplus (E&S) market, with its flexibility and tailored solutions, remains a crucial resource when protecting properties against CAT and other exposures. To learn more about Residential Property E&S Solutions and addressing CAT risks, we spoke with Chanon Murphy, Manager, Personal Insurance, Burns & Wilcox, Houston, Texas.
What are some of the greatest risks today when it comes to Residential Properties?
C.M.: This year, nearly 45% of homes in the U.S. faced at least one type of severe or extreme climate risk—flood, wind, wildfire, heat, or air quality. These CAT exposures are widespread and among the greatest risk when it comes to Residential Properties today. As a result, Personal Insurance is in a hard market right now. The increasing frequency and severity of natural disasters have led to higher claims, losses into the billions of dollars, and some carriers leaving markets. It becomes challenging for retail brokers and agents to find solutions in the standard market—making E&S Wholesalers a critical partner to brokers when looking for coverage.
Why are retail brokers and agents turning to E&S?
C.M.: You can no longer say a standard Homeowners’ policy covers everything; you really must review each policy’s Terms & Conditions to ensure adequate protection. Brokers often find disasters and other risks may not be covered, with exclusions on wildfires, floods, and wind. Within the E&S market, capacity is available and wholesale partners, like Burns & Wilcox, can offer creative solutions, tailored endorsements, and enhancements that help fill coverage gaps. Simply put, brokers are finding long-term partnerships and comprehensive coverage for Residential Properties and CAT exposures within the E&S space.
Which insurance policies can help protect against these threats?
C.M.: Every situation is different, which is why we take a customized approach. For example, a Homeowners’ policy often does not include Wind coverage. If a client’s property is in a high-risk area, we can help secure a separate Wind policy to round out the protection. Flood coverage is another crucial consideration. Even homes outside flood zones can experience flooding. In September 2024, Hurricane Helene and other storms dumped more than 40 trillion gallons of rain—enough to fill 60 million Olympic-sized swimming—on the Southeast United States over one week causing catastrophic inland flooding. Insureds should look to include Primary and Excess Flood Insurance. Remember, no one-policy-fits-all solution exists. Every policy will have different enhancements depending on the carrier, the company, and the risk. So, brokers and agents must match the right policies to their client’s specific risks and exposures, with the counsel of their wholesale partner.
Are there special considerations or additional coverages available for certain scenarios?
C.M.: Absolutely.
- Water: If a client has had previous water losses, we can add Water sub limits, exclude Water, or increase Water deductibles.
- Wind: If a client is in a coastal area and the carrier requires them to carry a 5% deductible, which we are seeing is starting to creep up, but the mortgage company will not accept it, we have a Wind Buyback policy where we can buy that deductible back down for the insured. The mortgage company is happy, and the insured is satisfied with the out-of-pocket costs in the event of a loss.
- Wildfire: Risk mitigation to improve the insurability of a home is crucial. Burns & Wilcox has partnered with Wildfire Defense Systems (WDS) to provide qualified wildfire resources and personnel to the insureds of its retail insurance clients in 12 states. WDS specializes in wildfire prevention and loss mitigation, offering homeowners an added layer of protection. In one case, WDS was able to cover a house in gel foam, and even though a wildfire burned the house next door to the ground, the protected house was standing after the wildfire.
What steps should clients take, or what services should they invest in, to complement this insurance coverage from a prevention standpoint?
C.M.: Preventative measures can make a big difference in protecting property and securing coverage.
- Automatic Water Shutoff Valves: These can prevent significant water damage by stopping leaks early.
- Central Station Fire Alarms: Immediate alerts to the fire department can reduce damage.
- Temperature Monitoring Systems: In cold climates, these prevent frozen pipes by automatically adjusting home temperatures.
By investing in preventative measures, clients reduce risks and may qualify for discounts or access to broader coverage options.
How do these preventative measures affect underwriting for these policies?
C.M.: Carriers increasingly reward proactive clients. For example, having a water shutoff valve can decide coverage eligibility with some carriers. Burglar and fire alarms may also lead to premium discounts. These investments protect the home and can make a difference in securing coverage at the best rate.
What advice would you give brokers to increase their success rates?
C.M.: The most important thing is to educate your clients. Clients may not be aware of their needs or how to articulate requests for enhancements. It is essential to highlight that the cheapest insurance policy isn’t always the best option, as it often lacks critical coverages such as Wind, Wildfire, and Water.
Additionally, it is crucial to understand each client’s unique risks, which can vary significantly depending on their geographic location.
Finally, when in doubt, call us. Burns & Wilcox is here to support you with expert advice, comprehensive solutions, and the capacity to manage even the most challenging risks.
Residential & CAT Property Insurance
Why your clients might need it: To protect against commonly excluded risks such as wildfire, flood, wind, and earthquake damage—especially in coastal areas that are prone to natural disasters.
Protects against: Specific perils or high-value coverage amounts not included on standard Homeowners’ Insurance policies.
Expert opinion: Preventative measures can make a big difference in protecting property and securing coverage.
