How NC insurers use drone, satellite photos to drop home policies (and what you can do)
For 30 years, the Reslers have lived in a 1991 ranch-style home they built themselves in Colony Lake, a modest subdivision on the edge of Chapel Hill.
During that time, they’ve used one company to insure both their car and home: Nationwide.
Apart from a small claim filed over two decades ago, they’ve never asked for anything else. They paid their premiums on time, around $83 each month. And despite rising costs, they felt secure knowing that they’d built their 1,497-square-foot home in a relatively low-risk area far from the coast.
Then last September, through their local agent, they received a nonrenewal notice from the Ohio-based Nationwide. The company’s decision reflects a growing trend as underwriters tighten guidelines across the state.
“We were stunned,” said the 68-year-old retired nurse. “We’d been faithful customers, but there was no conversation.” They didn’t even send an inspector to survey the property, she added.
Instead, Nationwide employed a third-party, Cape Analytics. The California-based firm employs “geospacial imagery, computer vision, and artificial intelligence” to gather property data for insurance underwriters, its website says.
Based on an “aerial photo,” the Reslers were issued the nonrenewal letter and given 30-day notice. They were advised to obtain new coverage. If they failed to do so, their bank would purchase a policy for them, likely to be more expensive with less coverage.
A month later, Nationwide, which writes about 7.3% of the state’s insurance policies, disclosed that it would drop 10,525 homeowners’ policies in Eastern North Carolina. It’s unclear if the Reslers’ nonrenewal was part of this pullout.
Nationwide did not respond to calls or emails seeking comment.
A surge in nonrenewals
Insurers using drones or satellite images as part of the underwriting process isn’t new.
Where once companies sent agents into the field to take photos, “the use of drones expedites this process,” said Barry Smith, a spokesman for the state’s Department of Insurance.
It’s also cheap and legal. In North Carolina, anyone can fly a drone over your house as long they follow Federal Aviation Administration regulations (up to 400 feet above a building’s roof line if they’re inspecting it); and obey state laws regarding privacy and trespass.
But in recent years, as weather-related risks mount, mega-insurers like Nationwide and All State are increasingly using aerial photography and other “insurtech” — like artificial intelligence and risk modeling — to screen potential and existing customers, consumer groups warn.
It’s led to a surge in nonrenewals and denied claims, a recent Wall Street Journal report found. It’s also reopened a debate over privacy concerns, and whether the practice is fair at a time when insurers are finding it harder to operate in North Carolina and residents face skyrocketing premiums. The Rate Bureau, which represents insurance companies, and the state are currently trying to reach a settlement on new rates.
To navigate this tricky landscape, “consumers need more nonrenewal protections,” consumer watchdog United Policyholders said in a May 15 blog post.
Among them: requiring insurers to provide timestamped images of the home, and an appeal process to correct any errors and continue coverage.
Oftentimes, customers are left in the lurch with just 30 days to find a new policy, the group argues, and few paths to argue their case.
A surprise ending
When they received their nonrenewal letter, the Reslers pushed back. They asked to see Cape Analytics’ roof report, which their agent provided.
The three-page report included an “orthogonal” aerial image from May 5, 2023, concluding the roof was in “poor condition” with “minor discoloration and streaking,” but “no defects or loose organic matter,” like mold. It included no information on how to appeal.
In 2011, the Reslers had paid $10,000 for a four-star roof. They still had 40 years of coverage — and the receipts to prove it. The roof’s installers returned to re-inspect and “found it to be sound” but in need of a good power-wash — which “we had done,” she said. They provided the documentation to Nationwide.
In the meantime, they went shopping for insurance.
By the time Nationwide circled back to accept their documentation, the Reslers had switched companies, based on Consumer Reports and customer reviews they found on Nextdoor.
“I lost all trust in [Nationwide],” said Rosemary Resler said.
The couple also ended up saving about $200 a year with more coverage and learned an important lesson: “Be my own advocate and shop around. Being loyal to an insurance company doesn’t mean they’ll remain loyal to you.”
What to know
If an insurance company sends you a nonrenewal notice or rejects your application for a new policy, United Policyholders offers the following consumer tips:
Ask in writing to show you the specific underwriting rule that disqualifies you.
Find out if they’re basing their decision on aerial images and if so, request copies of the images.
See what steps you can take to address the conditions that disqualify you.
Request for time to complete those steps.
Get confirmation that they’ll offer you a new or renewal policy once you provide documentation that the work is complete.
Read more here.
NC Reality Check is an N&O series holding those in power accountable and shining a light on public issues that affect the Triangle or North Carolina. Have a suggestion for a future story? Email realitycheck@newsobserver.com
