Home insurance companies have found a new way to deny coverage, and it involves spying on consumers' homes via drones, airplanes and high-altitude balloons, according to a recent report from The Wall Street Journal.
The report reveals that an increasing amount of U.S. consumers have been dropped by their home insurer as a result of what was found in aerial images of their homes that were taken by their insurer without their knowledge.
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Insurance companies take these images of their customer’s homes using multiple aviation methods to evaluate a property’s risk level by looking for issues such as “damaged roof shingles, yard debris, overhanging tree branches and undeclared swimming pools or trampolines,” according to the Journal. Some consumers even claim that they are denied access to those images, which takes away their ability to dispute those claims.
The report also reveals that aerial home inspections are something insurance companies claim their customers give consent to when they purchase a policy, and that it allows them to “respond more quickly to disasters and charge rates that better reflect a property’s risk.” The companies also claim that aerial home inspections are “less intrusive” than visiting customers’ homes to do inspections.
In a post on Reddit a few months ago, a user on the platform revealed that their policy with Farmers Insurance was canceled after the company allegedly took a “single aerial photo” of their home that showed that their roof was in “poor condition.” The user wrote in the post that Farmers’ claim is not true as their roof is free of damage, and that they have been re-sealing and re-coating it every year.
“They can’t tell me when the photo was taken, and they can’t tell me what the ‘poor condition’ is,” wrote the user on Reddit.
Major insurance companies such as American International Group, State Farm and Allstate have gained approval from the Federal Aviation Administration to use drones for insurance adjustment claims over the past few years.
The move from insurance companies to drop its customers over issues they identify in aerial images of homes comes amid a recent trend where insurers are choosing to leave several states due to high-risk factors that increase the frequency of claims in those areas.
In 2022 and 2023, a plethora of insurance companies left the state of Florida due reasons such as the state’s high storm risk and increasing insurance fraud numbers.
During the same time period, California also began to face an exodus of major insurance companies choosing to leave the state due to California’s insurance laws and the increased risk of wildfires.
Many insurance companies are facing heavy financial pressures due to inflation which has caused an increase in housing and labor costs, resulting in higher insurance claim payouts.
As a response to these financial pressures, consumers have also recently seen an increase in home insurance rates. Over the last two years, rates have increased by 20%, according to a new report from insurance company Insurify. The report also predicts that in 2024, home insurance rates will rise by 6%, which will place the annual average for home insurance costs at $2,522 by the end of the year.
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