Has Your Insurer Dropped You?

The massive increase in the number and ferocity of wildfires in California has caused several insurance companies to notify policyholders living in what they term high-risk areas, that their home insurance policies will not be renewed. The insurance payouts are not sustainable. This may seem like a cruel blow when the need for this coverage is increasing every year. The fact is that insurance is a business like any other and for an insurance company to make profits, it must trim the areas where it makes losses. If you happen to be one of those who has received such a notice, there is no need to panic. In California, insurance companies must give a notice of non-renewal 45 days before the existing policy expires. That is enough time to find alternative coverage.

The Options

The first thing to do is to contact your existing insurance company to find out if there are any improvements and changes that you can make to your home that will once again make it eligible for insurance coverage. If your local fire department or any other authorized agency has a system whereby they conduct a fire inspection and give you a risk reduction certificate after changes are made, this may help convince the insurer to offer you a renewal.

If that does not work out, start shopping for coverage from other companies. Across the state, there are insurance companies that continue to offer home insurance policies. Where you live will determine how hard or easy it is for you to find replacement coverage. If you are in an area that has been designated as high risk in terms of wildfires, finding an insurer who is ready to offer you a policy will be difficult. If you can find a policy, it will, most likely, cost more, often much more than your old policy. The coverage may also be reduced. Another factor to consider is that the policy available may be from a “non-admitted” insurance company. Admitted insurance companies are regulated by the California Department of Insurance and policyholders are protected by the California Insurance Guarantee Association. Policies from non-admitted companies do not enjoy this protection.

Do not buy a new policy blindly out of desperation. Check whether that coverage is what you need to rebuild your home in conformity with current building codes if it should be completely destroyed. Many policies have limitations that will restrict the amount of  payout which could leave you short of what you need to rebuild.

If nothing works out, you can always buy insurance from California Fair Plan which is a state-run program that offers fire insurance to those who are unable to find other coverage. This coverage will be for only basic fire protection and will have no theft or liability coverage. It will also cost more than home insurance from private insurance companies.

Be Sure Before Buying

There are many options for buying a new home insurance policy, but each has its own pros and cons. Buying a policy that does not give you the coverage you need could leave you in major financial difficulties when a claim does not give you the payout you expect and need. Avoid the uncertainties and risks involved in buying a home new policy by contacting an insurance broker for advice and guidance on how to get the best coverage at the best price.