The California Property Insurance Crisis
This is a summary of notes taken during a Department of Insurance Webinar with the
California State Insurance Commissioner -Ricardo Lara
Climate change has reached the insurance market. It is a global event with rising insurance costs across the USA. There continues to be unprecedented fires, floods, snowfall, earthquakes, hurricanes, and tornadoes. Other things that have contributed to higher insurance costs include rising inflation and the cost to rebuild. State Farm, Allstate, and Farmers Insurance are some of the major carriers not writing new policies. HOAs are among the hardest hit by the crisis with larger premiums and having coverage dropped. Some condos have re-organized the development in smaller units to help mitigate the impact.
There are new tools for the industry like risk scores and drone technology that allow insurance companies to access risk faster and more conveniently. On the topic of insurance risk scores, insurance companies must provide the risk score to a homeowner or business. After mitigation, request a new score.
People do not shop the cost of insurance prior to making an offer. Consequently, they are often met with a surprise or feel pressured to decide at the close of escrow, because they did not take time to research their options in the beginning.
Some of the options that are available for people who are challenged by home insurance include the following:
- California Fair Plan
California Fair Plan is run by insurance companies and was born out of the 1992 riots in Los Angeles, CA. It is expensive and should be a temporary option. A homeowner can get replacement value and other options are not clearly explained. $20,000,000 Commercial coverage is available.
- Designations: Safer from Wildfire Designation
Wildfire Preparedness – www.wildfireprepardness.org
Firewise designation
May allow you to qualify for a discount
- California Department of Insurance Website – insurance.ca.gov 800.927.4357
There are special programs for seniors and disabled, check the department of insurance website for the latest information. There are over 100 companies are still writing insurance and department of insurance is still approving new plans.
4. Harden your home about roof material, defensible space etc., it may qualify you for a discount.
- United Policy Holders uphelp.org
They have been in business since 1991 and may be of assistance
- Increase your deductible to help manage the cost of insurance. Deductibles starting at $5000 is common to keep premiums low
- Use a professional insurance agent that has connections in other states
The best action to become an insurance expert. Do not be “penny wise and pound foolish when it comes to insurance.