Our Fate is Your Fate, an Ongoing Series


They take your money, then cancel your policy:

GARDEN CITY, N.Y., Oct. 15 -- It is 1,200 miles from the coastline where Hurricane Katrina touched land two years ago to the neat colonial-style home here where James Gray, a retired public relations consultant, and his wife, Ann, live. But this summer, Katrina reached them, too, in the form of a cancellation letter from their home-insurance company...

In the last three years, more than three million homeowners have received letters like the Grays' as insurance companies, determined to avoid another $40 billion Katrina bill, have essentially begun to redraw the outline of the eastern United States somewhere west of the Appalachian Trail.

Public officials in Southern states from Florida to Texas have been fighting insurance carriers for years over rising rates and withdrawal of services, but officials in the Northeast have only recently joined the fray.

Companies including Allstate, State Farm and Liberty Mutual have "nonrenewed" policies not only in hurricane-battered places like Florida and Louisiana, but in New York and other Northern states that have not seen hurricanes in years. Since last year, those three companies and others have turned down all new homeowners' insurance business in New Jersey, Connecticut, Rhode Island, Maryland, Massachusetts and the eight downstate counties of New York.

An independent insurance agents' group puts the Grays among about 50,000 residents of the New York metropolitan area -- and about one million homeowners in the Mid-Atlantic and New England states -- whose policies have been canceled since 2004. While most homeowners have been able to find coverage with other major insurers, or with smaller companies, in most cases it is at higher rates and with larger deductibles...

Betty Clark, a retired waitress living on a fixed income in a modest house where she raised her children in Eastham, Mass., on Cape Cod, said she had no idea how the tussle between insurance companies and public officials would play out. But after years of paying $742 a year, her home insurance doubled last year, to $1,440, which she would not be able to afford if not for some help from her children.

"I’ve never made a claim in all these years," she said by telephone. "And yet, here it’s possible I’ll lose my home," she said.

In other words, the insurance industry considers their "service" to be little more than facilitating the purchase of property (which requires a homeowner's policy). Claims are restricted to an unbelievably narrow criteria--and then, as often as not, are paid only AFTER the policy holder has had to threaten legal action.

Sounds like a wingnut's dream world, but more of a dystopian nightmare for any rational person.