Home Insurance Shopping

Home insurance shopping? Has your insurer dropped you?

In June 2024 Amy Bach, Esq., Co-founder and Executive Director of United Policyholders, addressed the current home insurance status and important actions homeowners should be taking today.

Current Rules:

• Insurer must give 75 days notice if they won’t be offering you a new policy when your current one expires
• Your insurer can drop you but they have to tell you your risk score and offer an appeal process for improving your score
• The CA Fair Plan (an “involuntary” association of private insurers) offers up to $3M in residential coverage for fire risk (no liability, water, wind) and a discount of up to 15% to those who meet the “Safer From Wildfires” or the “IBHS Wildfire Prepared Home” standard and live in Firewise communities. Other insurers should also be giving you a discount for home hardening/defensible space work done to your home.
• The California Insurance Commissioner’s “Sustainable Insurance Strategy” is in process. It focuses on updating the rate review/approval process, allowing insurers to use CAT models for setting rates and pass along a portion of their reinsurance costs in return for insuring more homes in “distressed” areas.

Have you been dropped by your insurer?

• Start shopping right away
• Ask about your Risk Score, appeal errors
• Get help from an experienced, pro-active insurance agent
• Ask good questions, keep good notes
• If the Fair Plan is your only option, aim for add-ons if affordable, keep shopping even after your Fair Plan policy is in place
• Be prepared to make risk-reduction home improvements

Despite limited options and high prices, be prepared, not scared:

• Get educated on your options
• Seek out a pro-active, consumer-oriented agent/broker
• Avoid underinsuring your dwelling: Aim to insure for replacement value, including coverage for building code upgrades
• Compare what premiums will be w/various deductibles
• Reduce/eliminate non-essential coverages where feasible
• Create a home inventory, and store it safely
• Help your community be Firewise/Fire Safe
• Mitigate! Take steps to “harden” your home and create defensible space

Yes, insure your home!

• Insurance money—not charitable or government aid—is the #1 source of money that helps people rebuild and recover after a disaster
• FEMA money is needs-based and the maximum grant is $42k. Average ~ $5k
• SBA loans are low-interest but must be repaid
• Charitable aid generally covers basic needs—not the cost of rebuilding a home

What matters:

• Replacement coverage over Actual Cash Value
• Extended replacement coverage
• Building Code Compliance/upgrade coverage
• Adequate dwelling and Additional Living Expenses
• Extra for art, jewelry, business property, guns
• Know what’s excluded/limited: Flood, Earthquake, Mold, Earth Movement
• Deductible

How much dwelling coverage is enough?

• Dwelling replacement cost estimating software programs that insurers require agents to use generally undervalue home replacement costs. 2/3 of wildfire-impacted households find themselves underinsured
• The CA Fair Plan (and possibly others) are requiring replacement cost estimates for homes valued at over $1.5 million

Option:
https://bwbuilder.com/services/replacement-cost-estimate/
$150 fee. If you enter this code, “Uphelp2024”, BW Builder donates $25 to support United Policyholders work

Questions to ask about an insurance proposal/offer:

1. What can you tell me about this insurer’s financial strength and reputation for good coverage and claim handling?
2. Will this policy cover the cost of rebuilding my home to its pre-loss condition?
3. What causes of loss are not covered?
4. Will my insurance cover the cost to upgrade electrical, plumbing and other building codes upgrades if I have to make repairs or rebuild my home?
5. For how long will my temporary rent and related expenses be covered while my home is being repaired or rebuilt after a loss?
6. What items are subject to limits or exclusions and for which of these limits or exclusions should I consider adding coverage?
7. What are my options for insuring my home-based business property and operations?
8. What discounts do you offer and how do I qualify for them?
9. How much can I save if I increase my deductible? Flat or %?

Help United Policyholders to continue to monitor and contribute to solving CA’s property insurance crisis.
Please take, and encourage your neighbors to take their survey.
www.uphelp.org/CAHomeSurvey
The data collected will help them help all of us.

For more information and guidance, please visit www.uphelp.org/droppedCA

The full slide presentation can be seen by clicking HERE.