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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Homeowner’s Insurance, Title Insurance and Home Warranties

Insurance Choices Home Buyers Face

Insurance Choices Home Buyers Face

Home buyers & sellers in Silicon Valley hear about various types of real estate related insurance products and they can sometimes be confused with one another: Homeowner’s (or Fire) Insurance, Title Insurance and Home Warranties. We’ll discuss them today and hopefully will clear up the confusion.

Insurance Choices: Homeowner’s Insurance, Title Insurance, and Home Warranties

Homeowner’s Insurance pays you money to cover losses in the event of a fire or other unseen catastrophe (such as a tree falling on your home, a fire caused by lightening or a fence falling down in a windstorm).  Often there’s a deductible but beyond that you have major coverage for losses in most cases. There are some caveats, of course.  If you purchase a home using financing, your lender will require you to buy this type of insurance.  It is sometimes also called Fire Insurance.

Homeowner’s insurance does not cover damage from earthquakes or flooding from creeks, rivers or dam failure.  If you have a fixture that fails and the home floods, though, that is probably covered.

Homeowner’s insurance does not guarantee that if something is destroyed it can be rebuilt.  For instance, in older parts of Santa Clara County (such as downtown Saratoga, San Jose, Los Gatos and Willow Glen) there are detached garages built right up against the property line or very close to it.  In most places there are now setback requirements of about 5 feet or so.  Should that garage burn down (or be destroyed by termites or anything else), it can only be rebuilt, most often, if it’s moved.  Creating a new foundation is expensive – and that may not be covered by your HO insurance.
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