For over 20 years one of the biggest money losers in the insurance industry was the homeowners insurance product line. Finally, insurers are reaping some nice profits after re-underwriting their existing books of business and forcing consumers to shape up their homes or risk losing coverage entirely.

From the early 1980s till the early 2000s the homeowners insurance product was overly competitive. Insurance companies were giving away the product to entice consumers in order to gain market share. Even though two decades went by and insurers continually watched their surpluses dip too low, competition remained fierce.

Enter black mold. After a jury in Texas decided to punish Los Angeles based, Farmers Group Inc., to the tune of $25 million for denying a claim to an early 1900s home, built on a marsh in a Texas wetland for mold, the insurance industry cringed like no other time in their history. The precedent was set and attorneys lined up at the trough with big green eyes to get into a new niche market - black mold or maybe it was black gold. Whatever you want to call it, mold claims started coming in faster than you could shake a stick. Apparently mold can make people sick and if a homeowners insurer didn't pay to remove it, and fix the structure around it, they would be sued for bad faith, and lose.

The residential construction industry was also quick to pounce on this opportunity, advising their customers to claim any and all dry rot damage as mold to help pay for that desired remodel. So once consumers learned they could get that bathroom or kitchen remodeled on the insurance industry's tab, they called their agent and filed the claim. At one point, Farmers Group Inc. was receiving over 200 mold claims per week, in California alone! The insurance industry was rocked! Pushed back on their heals, one by one, the insurance industry doors to homeowners insurance began to close. The big daddy, Bloomington, Illinois based State Farm started the trend and decided no more homeowners coverage would be sold and many of the rest of the carriers either followed suit or decided to take the opportunity to change their policies and raise rates. Little by little, homeowners insurance became very difficult to acquire and if you could find a policy, it was expensive. At one point in 2003, after the famous Santana Row shopping center fire in San Jose, California, it was obvious that wood shake roofs were going to fall out of favor with consumers and definitely insurers. Many of the homes with wood roofs within a 1-mile radius, downwind from this huge blaze burned from flying embers and those with asphalt or composition shingle, tile, and synthetic material roofs did not. This only added to the harshness the insurance industry pursued in only insuring the best-kept homes. The real estate industry began to catch on to this and anyone selling a home was advised to either give a credit for a new roof at the sale or have the seller replace the roof prior to the sale of the house because the lack of homeowners insurance availability was causing deals to fall through the cracks.

Have a branch touching your roof, cut it back. Have a crack in your driveway, patch it. Is the paint peeling on the sunny side of your house, sand it down and paint it. Your insurer is now hiring inspectors to take photos of the homes they currently insure and if there is some fault that is visible, your policy could be on the chopping block.

Now that insurers have stopped the bleeding and started to build up reserves which translate to profits from this product line, the deals on homeowners insurance will start to creep back into the fold and competition may soon be on the rise once again. Bold insurers are always looking to jump in and buy up market share if they feel the timing is right and now seems like the right time.

However, make it easy on yourself. Make your home the one all the insurance companies want to insure. Keep your home in excellent repair, don't make silly claims only to get a couple hundred dollars on a 20 year old fence you're surprised lasted as long as it did and wipe up around the bathroom floor after you take your shower or bath. If nothing else, remember this, insurers will always prefer severity to frequency when it comes to claims!