Dont Miss a Payment for Your California Homeowner Insurance Concerns in 2023.

California Homeowners Insurance Concerns

The property insurance market in California is going through some pain. The root of the problem is a disconnect between what the insurance companies need/want to charge in premium in order to maintain a viable insurance market, where they can pay out claims, cover their costs, and make a fair profit, vs. what the California Department of Insurance (DOI) will allow them to charge. Coming out of the pandemic I believe the DOI, in an attempt to protect consumers, halted the insurance companies from raising their rates as high as they requested. Also, the existing regulatory environment hampers insurance companies’ ability to raise their rates.

As unprecedented losses from wildfires and other extreme weather events piled up, coupled with inflation driving up the costs of lumber and other materials, the cost to repair or rebuild homes climbed. Eventually coming to a head when many of the biggest insurance companies in the state decided they can no longer offer insurance here unless and until they can get significant rate increases passed. State Farm and Allstate stopped offering new policies in the state, and many other insurance companies such as Farmers, Travelers, USAA and others started limiting the number of new policies. Many other insurance companies not only stopped writing new policies, but actually pulled completely out of the state and have begun non-renewing their existing customers.

The companies still operating in the state have responded by severely tightening their underwriting standards and redrawing their brush maps. It is currently very difficult to find insurance for properties that are in or near a brush area, properties that have deferred maintenance (old roof, peeling paint, overgrown yard etc.), and properties where multiple insurance claims have been made.

In response the Governor and the Commissioner of Insurance have both recently issued statements indicating that they are looking at ways to, among other things, streamline the rate approval process so that hopefully the companies that left the state or paused new business will return to the market.

Unfortunately at this point everyone should brace for higher insurance prices in the future. Policyholders are advised to maintain their current coverage if possible by making sure they pay their bills on time and comply with insurance company requirements. One way to reduce your premiums is by increasing your deductible. In this current environment you don’t want to make an insurance claim for something fairly small, so maybe better to take the savings from a raised deductible and save using your insurance only for something fairly catastrophic.

Make sure to make paying your insurance bill a top priority.

Call Jason Buck for more information about the local real estate market or upcoming properties.

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