Homeowners insurance is essential for protecting your home and belongings from financial loss in the event of a disaster. However, in California, homeowners are facing increasing difficulties in obtaining and maintaining affordable homeowners insurance.
There are a number of factors contributing to this crisis, including:
- Wildfires: California is prone to wildfires, which have become more frequent and severe in recent years. This has made it more difficult and costly for insurance companies to insure homes in wildfire-prone areas.
- Rising construction costs: The cost of rebuilding homes has risen sharply in recent years, making it more expensive for insurance companies to pay out claims.
- Insurance companies exiting the market: A number of insurance companies have exited the California market in recent years, due to the high costs of doing business in the state. This has reduced the number of options available to homeowners and driven up premiums.
As a result of these factors, many homeowners in California are finding it difficult (to put it mildly) to obtain homeowners insurance, or are facing significant premium increases. This is particularly true for homeowners in wildfire-prone areas.
There are a number of things that homeowners can do to try to reduce their risk and obtain affordable homeowners insurance, including:
- Take steps to mitigate wildfire risk: This could include hardening your home against wildfires, such as installing fire-resistant roofing and siding, and clearing vegetation away from your home.
- Consider your needs and budget. When shopping for a policy, be sure to consider the type of coverage you need, the deductible you are willing to pay, and the premium you can afford. You should also consider your home's location and any other factors that may affect your risk, such as the age of your home and its construction materials.
- Read the fine print before you buy. Once you have found a few quotes that you are interested in, be sure to read the fine print carefully before you buy a policy. This will help you to understand the coverage that is being offered and any exclusions or limitations.
- Bundling homeowners and auto. Consider bundling your homeowners insurance with your auto insurance. This can often save you money on your premiums.
- Discounts. Ask for discounts! Many insurance companies offer discounts for things like installing security systems or having a claims-free history. Many also offer discounts for members of certain professional organizations.
- Consider the California FAIR Plan: The FAIR Plan is a state-run insurance program that provides coverage to homeowners who are unable to obtain insurance from the private market. However, the FAIR Plan is more expensive than private insurance and offers less coverage. When purchasing a policy through The FAIR Plan, it is recommended that you obtain a secondary policy to bridge the gaps in coverage provided by FAIR Plan. The FAIR Plan is the carrier of last resort in California.
The California legislature is currently considering a number of bills aimed at addressing the homeowners insurance crisis. However, it is unclear when or if these bills will be passed into law.
In the meantime, homeowners in California should be aware of the difficulties in obtaining and maintaining affordable homeowners insurance. If you have a current policy in place and are offered a renewal, be sure to pay your renewal bill in a timely manner to avoid any lapse in coverage. Most carriers are not offering any grace period for non-payment of premium.