Many California homeowners were caught off guard this year when their homeowners insurance policies were non-renewed. It has become one of the biggest topics of conversation for my clients as well as people in my community scrambling to find a solution. State Farm and Allstate abruptly pulled out of the California market after experiencing multi-billion dollars losses in previous years from fires and other claims. The cost to pay these claims combined with the expense of rebuilding a home in California became too expensive and now homeowners are left with limited options.
The California Fair Plan is the option of last resort for homeowners that need to have a policy for their home. This plan is guaranteed by the state of California but is very expensive and only has limited coverage. More often than not this means the homeowner also has to get an additional excess policy to cover up to the limits they would need to a worst case scenario claim. Additionally, most insurance companies will not insure homes over $2 million which has made the luxury real estate market more stagnant in the past few years.
The good news is that California and the department of insurance is working on new strategies to incentivize insurance companies to come back into the state. This may take some time, but for now I am working with my clients and network to explore their options and also be ready to pivot if issued a non-renewal notice. Additionally, with my buyer making offers on a home we can get an insurance quote before submitting an offer to estimate what a monthly payment will look like once they become homeowners.
Dean Powell
Keller Williams Realty Danville
CA DRE # 02108792
925-765-8584
Comments