Homeowners insurance policy limits questions [California]

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Tricky
Posts: 5
Joined: Fri Jun 17, 2022 7:26 pm

Homeowners insurance policy limits questions [California]

Post by Tricky »

We just got a notice of nonrenewal from our homeowner's policy insurers due to our proximity to higher-risk wildfire areas. California has an "admitted" insurer designation for companies whose rates are submitted to the CA Department of Insurance for evaluation -- none of those admitted insurers will write our policy. So we can either pay much higher rates for a surplus carrier policy or we can get a California FAIR Plan policy, which "provides basic fire insurance coverage for high risk properties when traditional insurance companies will not" but does not cover theft, flood, earthquake, hail, vandalism or personal liability. Then we would get a Difference in Conditions policy from another insurer to approximate the same coverages we would get (between both policies) from one traditional homeowners policy.

However, the CA Fair Plan has a total policy cap of $3M, which would apply to all claims for the dwelling, contents and all other coverages. Our broker is telling me that it would also have a 125% replacement cost cap (our current policy apparently has 200% cap). But these caps don't seem like a problem to me, as our home right now probably would sell for under $1.5M -- with a lower replacement cost -- and while I don't know how much our personal property would be, we certainly don't have any individual assets of unusual value. $1.5M in Southern California doesn't get you that much these days ;) I know that if there were to be a wildfire that wiped out our home there would be other expenses and that its very hard to say based on our individual circumstances, but are there rules of thumb relating to costs that make this $3M cap seem like we'd be underinsured?

We haven't seen the rate quotes yet of the surplus carriers but I'm expecting them to be very high. Trying to decide whether the FAIR policy would work for us.
bbrock
Posts: 1332
Joined: Mon Nov 23, 2009 7:55 pm
Location: CA

Re: Homeowners insurance policy limits questions [California]

Post by bbrock »

Was browsing for threads on CA Fair Plan. Came across yours.

I am with State Farm for our vacation home. The policy premium has increased 51% for this renewal. I find that to be absurd as there have been no exact changes to our structure to warrant a 51% premium increase. The agent is trying to say it is based on the area (San Bernardino National Forest) and to our house. But again, nothing has changed on our house.

Anyhow, I am done with getting pulled left and right by the insurance company. I am done with State Farm frankly. But, my only other option is to piece meal all our policies together (primary home, 2 autos, vacation home, and umbrella policy) to see if I can get a better deal. I shopped quotes through a broker last year, but they could not match our premiums; so I was again stuck with State Farm (I have been trying to break from them for sometime, but my longevity with them is tough to match with the other carriers).

What makes matters tough is that there are not any insurers rating new policies in the area where our vacation home is. Foremost will, but it's a separate policy for all except fire, and a separate fire policy must be purchased through the CA Fair Plan. The latest quote I have for both of those two premiums would be about $3600; the quote for the State Farm renewal that is 51% higher premiums $1900.

Long story short, guess I am sticking with State Farm until stuff changes.
bbrock
DebiT
Posts: 994
Joined: Sat Dec 28, 2013 12:45 pm

Re: Homeowners insurance policy limits questions [California]

Post by DebiT »

bbrock wrote: Mon Jul 25, 2022 11:34 pm Was browsing for threads on CA Fair Plan. Came across yours.

I am with State Farm for our vacation home. The policy premium has increased 51% for this renewal. I find that to be absurd as there have been no exact changes to our structure to warrant a 51% premium increase. The agent is trying to say it is based on the area (San Bernardino National Forest) and to our house. But again, nothing has changed on our house.

Anyhow, I am done with getting pulled left and right by the insurance company. I am done with State Farm frankly. But, my only other option is to piece meal all our policies together (primary home, 2 autos, vacation home, and umbrella policy) to see if I can get a better deal. I shopped quotes through a broker last year, but they could not match our premiums; so I was again stuck with State Farm (I have been trying to break from them for sometime, but my longevity with them is tough to match with the other carriers).

What makes matters tough is that there are not any insurers rating new policies in the area where our vacation home is. Foremost will, but it's a separate policy for all except fire, and a separate fire policy must be purchased through the CA Fair Plan. The latest quote I have for both of those two premiums would be about $3600; the quote for the State Farm renewal that is 51% higher premiums $1900.

Long story short, guess I am sticking with State Farm until stuff changes.
I am in So Cal, moved to San Diego area 3 years, and went with State Farm for everything when AAA refused to write my new policy. I actually feel better about them having everything, including my umbrella insurance , so that In the event of an umbrella insurance claim, there is no pointing of fingers to “it’s the other guy’s issue”

It seems to me you are complaining about State Farm raising rates, which is understandable , but also stating that their new rates are still well under anything else you could get. Unless I’m missing something, in your shoes I’d be feeling grateful that they are still writing policies in your area. I also know I would be worried about a major fire event where everyone is covered by the CA Fair plan, as to how quickly and how fairly they would pay claims.

I’ll be following this thread, since the definition of “fire area” in California seems to be getting broader and broader.
Age 66, life turned upside down 3/2/19, thanking God for what I've learned from this group. AA 40/60 for now, possibly changing at age 70.
bbrock
Posts: 1332
Joined: Mon Nov 23, 2009 7:55 pm
Location: CA

Re: Homeowners insurance policy limits questions [California]

Post by bbrock »

Yes, I was definitely complaining about the StateFarm 51% rate increase. But then of course once I found out with the California fair plan would charge, it puts things in perspective that 51% is a lot more tolerable than what the California fair plan plus Foremost wrap policy would cost.

So it’s going to be State Farm (lesser of two evils), and hopefully they keep renewing.
bbrock
tunafish
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Re: Homeowners insurance policy limits questions [California]

Post by tunafish »

State Farm handled my flood insurance in CA. (I know its the feds who provide the insurance.) They were so terrible the state sued them.
Jeepergeo
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Re: Homeowners insurance policy limits questions [California]

Post by Jeepergeo »

tunafish wrote: Tue Jul 26, 2022 2:45 pm State Farm handled my flood insurance in CA. (I know its the feds who provide the insurance.) They were so terrible the state sued them.
State Farm does an outstanding job of cashing payment checks and raising rates. Where State Farm is weak is evaluating and fairly paying claims.
DebiT
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Re: Homeowners insurance policy limits questions [California]

Post by DebiT »

Are there websites or other sources that rate insurance companies on how well they pay claims? That would obviously be an important metric if available,
Age 66, life turned upside down 3/2/19, thanking God for what I've learned from this group. AA 40/60 for now, possibly changing at age 70.
RetiredAL
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Joined: Tue Jun 06, 2017 12:09 am
Location: SF Bay Area

Re: Homeowners insurance policy limits questions [California]

Post by RetiredAL »

The family's (Dad's) Mountain Home (5000' elev) is insured by USAA and we have not received any flak from them. The rates have gone up, now running at about 2x the cost of insuring his Central Valley home. I have no issue with higher cost in higher risk areas.

#2 Son bought his first home in South Lake Tahoe late 2019 and USAA underwrote his home owner's insurance. That is years past when many of the other large insurance providers started cancelling policies to elevated fire risk areas.

FYI -- #2 Son is a Wildland Fireman.
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quantAndHold
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Location: West Coast

Re: Homeowners insurance policy limits questions [California]

Post by quantAndHold »

Remember that you’re only insuring the building and its contents, not the dirt that it sits on. So like for us, we have a house with a market value of $2M, but if it burned to the ground, the replacement cost for the structure would be more like $600k, and the contents maybe $2-300k.
DoubleComma
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Re: Homeowners insurance policy limits questions [California]

Post by DoubleComma »

You can be frustrated with State Farm’s 51% increase, but any admitted insurer willing to write in a high brush area is worth holding on too.

Our second home, Sierra National Forest, has been insured with CA Fair Plan w a DIC for several years. The combined premium is ~$5k with a $10k deductible and no Theft Coverage.
bbrock
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Joined: Mon Nov 23, 2009 7:55 pm
Location: CA

Re: Homeowners insurance policy limits questions [California]

Post by bbrock »

Yeah I’m planning to hold onto State Farm at this point

Perhaps I will see if I could break up my primary home and one auto with another company, and put the umbrella with State Farm or the competition, to see if I could find any savings.

May be a losing game. In years past I’ve comparison shopped directly with an insurance broker, Costco‘s Ameriprise which I now think is Connect, and Amica.
bbrock
Topic Author
Tricky
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Joined: Fri Jun 17, 2022 7:26 pm

Re: Homeowners insurance policy limits questions [California]

Post by Tricky »

Our broker had told us that the only option for our address was the CA Fair Plan.

Then a State Farm rep knocked on our door to let us know that State Farm was still writing policies in our area (they heard that residents on my street were being canceled by their existing carriers). We switched to State Farm. Not only are they cheaper than the CA Fair Plan, they are cheaper than our previous carrier (albeit because we had allowed our broker to raise our policy limits every year and weren't aware how high it had become). :)

I wish I realized that brokers don't have access to all carriers. I had assumed when they told us they had done a market check that State Farm would be among those they checked. But because SF doesn't work with brokers, they were not among the carriers our broker checked.
Last edited by Tricky on Wed Aug 10, 2022 12:00 pm, edited 1 time in total.
exodusNH
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Re: Homeowners insurance policy limits questions [California]

Post by exodusNH »

Tricky wrote: Wed Aug 10, 2022 11:48 am Our broker had told us that the only option was the CA Fair Plan.

Then a State Farm rep knocked on our door to let us know that State Farm was still writing policies in our area (they heard that residents on my street were being canceled by their existing carriers). We switched to State Farm. Not only are they cheaper than the CA Fair Plan, they are cheaper than our previous carrier (albeit because we had allowed our broker to raise our policy limits every year and weren't aware how high it had become). :)

I wish I realized that brokers don't have access to all carriers. I had assumed when they told us they had done a market check that State Farm would be among those they checked. But because SF doesn't work with brokers, they were not among the carriers our broker checked.
Yeah, State Farm and a few other big names are "captive agents." They only sell through their agents and those agents can only sell that insurance.

State Farm offers food multiline discounts. I've found them no more expensive than other insurance I've gotten through brokers. On the latter, you need to watch what type of plan they're offering. E.g. a cheap home owner's plan might be HO-3 vs HO-5. "Normal" people won't necessarily catch that, and never even know until they go to make a claim.
bbrock
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Joined: Mon Nov 23, 2009 7:55 pm
Location: CA

Re: Homeowners insurance policy limits questions [California]

Post by bbrock »

I had to research the jargon you’re using. Most policies are HO – 3. I personally didn’t know that but reading the description of it that’s the policy that’s written by State Farm.
bbrock
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