Highlights
For insurance companies, what is the difference between storms, wildfires and crime? If your home or business is broken into, if you are injured during a crime at home, or if your car is stolen, it makes little difference.
An insurer considers a risk undesirable for whatever reason. It could affect crime reporting.
Author
Leonard Adam Sipes, Jr.
Former senior crime prevention and statistics specialist at the Ministry of Justice Clearinghouse. Former Director of Information Services, National Crime Prevention Council. Former adjunct associate professor of criminology and public affairs at the University of Maryland, University College. Former police officer. Retired federal senior spokesperson.
Former advisor to presidential and gubernatorial campaigns. Former advisor to the national media campaign “McGruff-Take a Bite Out of Crime.” Successful media campaigns against crime produced by the state.
Thirty-five years leading award-winning (50+) public relations for state and national criminal justice agencies. Interviewed thousands of times by every national news outlet, often focusing on crime statistics and research. Created the first state and federal podcast series. Produced a unique and emulated style of proactive government public relations.
Certificate of Advanced Study – Johns Hopkins University.
Author of ”Media Success: Everything You Need to Survive Reporters and Your Organization‘ available from Amazon and other booksellers.
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The articles cited use modified citations for brevity.
Article
Q: Can you lose your home, business or auto insurance due to a crime? I would have thought it was a stupid question until I moved to a coastal area of Florida.
In Florida, insurance rates increase due to storms. It’s creating a housing crisis with people leaving the state’s coastal areas because they can’t afford the massive insurance increases. It’s especially difficult for condo owners in South Florida, who are also facing huge special assessments, to repair their buildings after a condo collapsed, causing several deaths.
It’s happening in every coastal area of the country, from Texas to the Northeast. It happens in the west due to forest fires. It happens in the Midwest because of tornadoes.
The bottom line is that people who can’t get insurance often go without or move, or use the state’s government insurer as a last resort. If a disaster occurs, it could put the state underwater financially.
It’s happening now because of crime
If you don’t live in areas affected by extreme weather, you may not be aware of the insurance challenges facing housing markets, businesses and the economy as a whole. Essentially, insurance companies are dropping “questionable” properties by the tens of thousands or insisting they storm-proof their structures, forcing thousands to make very expensive repairs.
But what’s the difference between storms, wildfires and crime? If your home or business is broken into, if you are injured during a crime at home, or if your car is stolen, it makes little difference. An insurer considers a risk undesirable for whatever reason.
Insurance companies use algorithms for both events. If you live in an area with a high risk of storm damage, your premium will increase.
If you live or own a business in an area with a high statistical probability of crime, your insurance premiums will increase.
Are already happening for your car or truck.” The higher crime rates will translate into [paying] a higher premium for your vehicle,” said David Glawe, President and CEO of NICB (National Insurance Crime Bureau).
But rising premiums may be just the tip of the iceberg. Maybe required to specifically protect your home or business against burglaries and other forms of crime. It happens to businesses and homes because of storms. Why wouldn’t that happen because of the crime?
But like the San Francisco Chronicle story below, you, your home or your business could be delisted altogether for crime. There are many reasons for not reporting crimes, and rising insurance premiums can quickly become one of many.
Our insurance agent in Florida warns us not to report storm damage unless it is substantial. Why shouldn’t the same idea apply to crime? Why call the police or your insurance company if it will lead to higher insurance costs forever?
What could happen?
Once insurance premiums rise beyond what is affordable, you stop paying. Communities are losing homes. Businesses leaving communities due to crime and rising costs deteriorate neighborhoods. The value of your home or business decreases.
Crime therefore becomes more than just a statistic. It can dramatically change your life or your finances. It can dramatically change the nature of communities.
San Francisco Chronicle
The insurance crisis is hitting Bay Area businesses, some of which have fallen due to ‘crime scores’
Nenna Jenner thought she got a good deal. Jenner, owner of the bar in downtown Oakland Feel more social, signed up for business insurance last year for $654 per month. The plan covered safety hazards, workers’ compensation and liquor liability.
But this spring, Jenner’s coverage was canceled and she was forced to switch to multiple carriers, merging their policies for a comprehensive plan. She now pays a total of about $1,000 per month – an increase of about 50%.
The reason Jenner was dropped, she was told, is because zip code 94612, which her company is part of, has a high crime rate — despite Feelmore Social itself having had no crime incidents.
Jenner is far from alone. A half-dozen small business owners and insurance experts told the Chronicle that insurance rates are rising, coverage is falling and fewer options are now common for small businesses. In many cases, owners have not filed any claims, but have still seen rates increase.
“Crime, theft, vandalism – those costs are all going up. … We see inflation. Insurance costs respond to the rest of the economy.”
Decante SF, a wine bar in South of Market, had to change insurers twice in the past two years. Costs have increased by $2,000 to $4,000 per year.
“It was really difficult,” says co-owner Simi Grewal. “I think there are just fewer carriers that want to operate with bars and restaurants.” Last month was her business robbed twice in two days.
A local small business owner is losing his insurance policy after three years of “adverse loss” due to claims for tens of thousands of dollars in damages due to the crime crisis. He told this exclusively in protest “The Jason Rantz Show” on KTTH that he won’t collect taxes for Washington unless he can find an insurance company willing to cover his business.
Nirav Sheth owns four brick-and-mortar small businesses in the Puget Sound region. He said the vandalism and burglaries are happening all the time, forcing him to file insurance claims to help cover rising repair costs.
Conclusions
First, the articles cited focus on businesses and vehicles, not homes. But the jump to housing seems inevitable. “If your home is in an area with high crime rates, You may also see higher premiums.”
People seem to have a pretty simple solution to crime; they move or harden their homes, businesses or vehicles.
But if part of a metropolitan area has high crime rates and high crime-related insurance, or homes or businesses that are uninsurable, then the value of everyone’s property drops.
When businesses, restaurants or bars close due to a lack of crime-related insurance, it hurts the overall spirit of the community.
Rising insurance policies or the loss of businesses or homes due to crime can have a major impact on the quality of life in a community or city.
When insurance rates started to rise many years ago due to storms in coastal areas, people thought it was temporary. Today we find out that this is not the case. The same could be true of crime. If higher premiums apply to cars and businesses, this also applies to homes.
And you could (want?) to pay the costs in more ways than you imagined.
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