Homeowners insurance

Homeowners insurance in the high fire zones - house in the woodsHomeowners insurance is once again in the news, and home owners (as well as those actively wanting to buy or sell a home) need to know how this may impact real estate transactions. This type of coverage is also called Fire Insurance, though it does cover losses beyond just those caused by fire.

  • Several major insurance carriers have either stopped writing new homeowners insurance policies in California or are severely limiting the number of policies that they’ll write.
  • For property owners in the Very High Fire Hazard Severity Zone, this limitation of conventional coverage is causing insurance premiums to skyrocket, especially if the insurer or last resort has to be used, the California Fair Plan. We’ve heard of insurance costs going up 10 times the previous rate or more in some cases!
  • There are some other options, listed below, that may provide some possible relief.
  • Insurance companies use their own maps, which are not published and in some cases have more expanded zones that they consider too risky for coverage.
  • Buying a home in an area with a higher fire risk? Find out about the insurability of the property BEFORE writing the offer.
  • My insurance agent recently told me that as a rule of thumb, “homes that are within 1000 feet of natural hillside brush or trees on any side of the home will have trouble getting insurance with many carriers.”

Major Homeowners Insurance Carriers Pull Back

Allstate, State Farm, and now Farmers have all pulled back from writing new policies in the Golden State, either completely or partially, due to the fires of recent years and the financial liability that they have caused those companies.

We’re not really in new territory here. Over the last 35 years, we’ve had several cycles of difficulty with obtaining homeowners insurance. In California. In years gone by it was challenging to get it after the Loma Prieta and Northridge earthquakes in 1989 and 1994, respectively. When a spate of mold cases came up in California and Texas in the late 1990s and early 2000s there was also a pullback by insurance companies.
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