Securing Insurance: Guidance for Acquiring Home Insurance in California

If 2024 marks the year you’re set to become a new homeowner, the subsequent and potentially more daunting task could be obtaining home insurance.

Alternatively, if you’re a current homeowner and have faced a situation where your insurance provider has dropped you, you’re not alone. This was the predicament faced by Alison Rosenberg from Marina Del Rey.

“Discovering that you can’t secure insurance for what is likely the most significant purchase of your entire life is quite perplexing,” she expressed.

Rosenberg found herself at a crossroads after her long-time insurance company terminated her coverage late last year due to three claims within a decade.

“I received an email stating that, due to previous claims, they could no longer insure me and would not renew my policy in January,” Rosenberg explained.

Facing rejection from other insurance companies, Rosenberg is now turning to the California Fair Plan, known as the state’s “insurer of last resort,” comprising all insurers licensed in California. It offers basic hazard coverage when homeowners can’t secure other policies. However, this “last resort” seems to be the primary option for many nowadays.

Data from the Fair Plan indicates a significant surge in policies from 2018 to 2022, with a total of 126,709 policies in 2018 growing to 272,846 in 2022. The plan has written 68,399 new policies in the current year, with 341,245 policies in force as of October 2023.

Amy Bach from the non-profit group United Policyholders and Karl Susman, an insurance agent with extensive industry experience, spoke with the NBC4 I-Team to shed light on the current situation.

A court ruling in November supports an order by the Insurance Commissioner, compelling insurers within the Fair Plan to broaden their coverage. However, Susman highlights the complexity of implementing such changes, estimating it could take years.

In the meantime, the Fair Plan suggests homeowners explore their “home hardening” discounts, offering reductions for home improvements that enhance safety.

Insurers are now utilizing technology to predict fire risk, leading to varying rates for neighboring houses.

Obtaining insurance, especially through the Fair Plan, is time-consuming. Experts offer the following tips:

1. Start the search early due to the overwhelming number of applications.

2. Know your budget and consider cutting non-essential coverages.

3. Engage an experienced insurance broker to navigate options efficiently.

For Rosenberg and others in a similar predicament, exploring all available options before the current insurance lapses is crucial.

Susman recommends holding onto existing policies, emphasizing the time it will take for new guidelines to take effect. He also advises against letting policies lapse and suggests setting up auto-pay for payments.

Bach adds a cautionary note about avoiding small claims, as they can impact risk scores and subsequent insurance options and costs.