Overview

Home insurance coverage challenges remain for California home owners as several large carriers have left the California market. Allstate, Farmers, and State Farm have all announced they will no longer be issuing new residential policies in the state. This is due to increasing risks from climate change, regulatory constraints, and rising reinsurance costs.

I wrote an article discussing these changes and how the insurance landscape may impact the local real estate market.

There have also been reports of an increase in non-renewals. This means that residential insurance is getting harder to find in any area that insurers identify as having a higher than average risk of wildfire. The Department of Insurance (DOI) doesn’t have the legal authority to tell insurers what level of risk they must write or where they must write insurance. However, the DOI does monitor the consistency in carrier decisions and ensures that decisions are based on considerations of risk, not other biases.

Top Tips

If you find yourself looking to purchase a home or facing a non-renewal on your current policy, here are a number of tips to help you navigate these challenging times:

1. If you get a non-renewal notice, contact your insurer. Ask if there are any specific actions you can take to mitigate your risk and retain your coverage.
2. If you think your non-renewal was unfair, you may file a complaint with the Department of Insurance.
3. Don’t let these actions delay starting your search for a new insurer. First, make sure you have done everything you can do at your property to mitigate fire risk. Then start shopping for coverage.
4. In addition to contacting local agents or brokers, review the Residential Insurance Company Contact List provided by the DOI. This list provides toll free numbers for over 50 insurers that are licensed to sell homeowners insurance. You can contact each of them to find the closest agent or broker or get a quote from them directly.
5. You may need help from an agent that speaks a specific language. Take a look at the Find an Agent or Broker tool to find one near you.
6. You can also utilize the Homeowner Premium Comparison tool and Homeowner Coverage Comparison tool to compare premiums and coverages.
7. If your agent cannot help you find coverage with an insurer other than through the California FAIR Plan, you or your agent should contact other agents and brokers who represent other insurers. The DOI Home Insurance Finder tool can help you find other agents in your region or beyond and tells you which insurers they represent.
8. Understand that the California FAIR Plan is available to every homeowner as a last option for coverage. The maximum limit written by the FAIR Plan on a residential property for all coverages combined is $3,000,000. Because the coverage provided by a FAIR Plan policy is very limited (and generally quite expensive), it is recommended that you supplement the FAIR Plan policy with a Difference in Conditions policy.
9. If none of these options work for you, you may try obtaining coverage in the “surplus lines” market. Ask your agent or broker if they are able to obtain coverage with a surplus lines insurer or obtain coverage through a surplus lines broker (note, surplus lines insurers are not backed by the California Insurance Guarantee Association).
10. To speak live with a staff member, you should call the Department of Insurance toll free at 1-800-927-4357.

If you’re looking to purchase a home with a mortgage, note that lenders will require that you have hazard insurance to protect their collateral. Make sure to get a quote on the specific property you are interested in purchasing as early in the process as possible. Feel free to reach out to me at any time for more information or for a specific insurance broker recommendation. With advance planning, we can navigate this changing insurance landscape together to help you meet your real estate goals.

This information is provided by the California Department of Insurance. For more information, go go www.insurance.ca.gov.