One of my closest friends is in escrow on a house and can’t find an insurance company to insure it. The house is in Southern California and they’re calling it a high fire risk area, though the homes have been there upwards of 70 years and have never burned. It’s not out in some wooded area, the house is in town. They may have to drop out of the sale if they can’t insure the house. Their only option would be the fair California plan and her understanding is it will be 20k a year. Her current home is insured by State Farm and the new home is insure by AAA but neither will write a new policy on the home. Have you all heard of this? I’m wondering if my current house is still insurable. We have about a million dollars in equity, but if we couldn’t sell it, it’d be worthless.
The same thing is happening in Florida. Folks can’t get home insurance.
I’m honestly baffled. I don’t think this home is in a high fire area. So now this 1.7 million dollar house is just unsellable? Truly if there are widespread areas of Southern California where you can’t insure existing houses, those markets will collapse.
This is quite common in my area of southern CA. A good portion of companies do not insure the area. I’m far from any kind of wooded area, so I’d expect near 0 increased fire risk. Perhaps it more relates to lack of granularity, such as choosing to not insure the full county/state, rather than analyze the specific fire risk for each town within the county/state. It’s my understanding that State Farm and All State chose to withdraw from the full state of CA for new policies (edited for clarification).
A good portion of car insurance companies also choose not to insure in my area. It’s my understanding that State Farm, Allstate, Farmers, and AIG and others have all chose to stop insuring new CA car insurance within the past year. Geico also closed CA offices, and Progressive stopped advertising in CA. However, even before that, a large portion of major carriers stopped insuring my area.
One factor is that government regulations can restrict the ability to raise rates fast enough to keep up with the rapidly increasing cost to insure (inflation, increase in housing costs, increase in car repair costs, wildfires, climate issues, … ), making the policies less profitable or unprofitable.
I’ve seen it in the news.
From June 17:
From Aug 18:
I’d be surprised if you can’t find any insurance at all, but persons in southern CA are likely to have more limited options than in other states, which can lead to higher prices. If you don’t have a good idea which insurers may be available, then you might talk with an insurance broker and/or real estate specialist.
I think we will lose our insurance in January and I’m getting nervous about finding coverage. We’re in FL with a house built in 2015 to hurricane standards. But the insurers are leaving the state.
Big time. It’s happening in CA as well as in many other states.
For CA, there is a state-administered home insurance program as you noted. It’s more expensive, but it is available for situations exactly like this. I didn’t realize it was THAT expensive. The number you mentioned is a shocker.
Hopefully, the CA Insurance Commissioner will use the collective clout of the state to make something work.
I’m not sure the information about State Farm in CA in another post is correct. We have several policies with them, and they are actively continuing to insure us. I think this may relate to new policies.
My friend so far cannot find an insurer. She’s using a broker after exhausting every insurance company she could think of.
Yes, this is happening in other areas. It’s one of the reasons why we decided not to look for new home insurance when our rates went up about 35%. Because we’ve had our insurance with this company for at least 5 or 7 years or something like that, they can’t drop us. But if we hadn’t been customers for as long, they could drop us, and a lot of people in our state are finding their only option to be the state’s insurance of last resort.
Yeah, $20,000 a year in Fair California plan fire insurance is about 10 times what they’re paying on their current house. I don’t know who could afford that. I’m not sure what the sellers of this home are supposed to do, but they won’t be able to sell homes in that area if they’re uninsurable. How sad to have owned a home for three decades and suddenly it’s valueless.
State Farm is renewing existing policies in California, but not selling new policies. We have State Farm as well.
Yes, it applies to new policies in California, not existing policies. So no more comparing rates when renewal time come, I guess - have to stick with current insurer. We have State Farm for both house and car and yes, we are nowhere near any fire or flood areas.
This is a good summary of the situation and the many reasons for it.
And here’s a summary of what the various insurance companies are offering.
https://www.usnews.com/insurance/homeowners-insurance/local/california
Frankly, I’m jealous. We do NOT have our state insurance of last resort, and if our house was valued at $1.7 million dollars, then we’d be paying about $24k/year (so our last resort insurer is well over the California one). At one point when I lived in a different house, the insurance was more like the equivalent of $45k/year (using your $1.7mil for $20k example). It’s one of the reasons why we plan to retire elsewhere.
That’s just stunning. It clearly has an impact on CA and all affected states in terms of selling their home with the possibility they might yank coverage on existing policies.
I know that several city councilmembers in various cities have been watching this, so perhaps leaning on them to lean on the state government officials is one way to try to alleviate this issue.
This is a real eye-opener for me, as I was counting on the FAIR program to be a backstop.
Thank you for the heads up on this.
They are paying $2,000 on a $1.7m house? I am paying more (in a different state) for a much much cheaper house.
No their current house is worth about a million. My current policy with State Farm is about $2400 a year, I think, on a 1.3 million dollar house.
My home insurance is up for renewal this month. I was able to compare rates like I have in other years. While the number of insurers that dropped my area has substantially increased over last year, there are also still plenty that do insure new customers. The situation socalmom describes with not being able to get any insurance is not the norm for CA.
I expect what is the more common scenario, is having a reduced number of insurers to choose from contributes to increased insurance rates. While I had many other options for new home insurance policies to choose from, I did not choose any of those other options because they’d be more than 50% what I was paying last year or more than double what I was paying 2+ years ago, for comparable coverage.
So, so, so jealous. Just asked my spouse what our current insurance rate is (it just renewed) and I was underestimating. We’re paying more than twice as much as you are for about 25% of your value.
What state are you in? That’s crazy.
My friend is being told that east of this street and south of that street, the whole area is not insurable.