2019/2020 INSURANCE UPDATE

CA is burning, don't get burned by insurance.

What realtors need to know about the CA insurance market. Home insurance is now a major problem for your escrow close.

Like real estate, insurance goes in cycles 2005-2014 was a “soft” or buyers’ market. Most insurance companies are big and dumb. It takes them 3-8 years to figure they are in trouble. After record losses in 2017 and 2018 fire catastrophe losses $25 billion and counting.

The insurance companies have been panicking. Drastic measures have been taking place. In 2018 one company went under another, forced to sell to avoid chapter 11.

Now 2018 is burning too. All bets are off. 

• All companies have “hit lists” of homes they are not renewing. The goal is 20% of their clients. 
• Some companies have stopped writing new businesses. Ours are Hartford and National General.

(few) almost no 

• Companies are accepting wood roofs.
• No claims are allowed. I have always said, “If you have a claim, have a big one.”
• No overhanging trees.
• No steps over 4 without railing.
• No late payments or reinstatements.
• Zip code closures.
• West of 280 good luck. Portola Valley is a dirty word. Throw out the good with the bad.
• Emerald Hills San Carlos, San Mateo tough.
• Menlo Park 94025 and Los Altos East of 280 94022 rates vary by up to 100%.
• Tahoe, Skyline, Santa Cruz mountains, Los Trancos Woods, out.
• As an existing client duck and cover. Pay in full early.
• No claims, no big changes, radio silence or you could be next.
• Most Non-Renewals rate goes from current $3,000 to $15,000.
• The new Hi Risk is the old ok. New purchases $10-15K homeowners could wreck the loan.
• We have added all the Hi Risk markets as possible. Even they are getting picky.
• Added CA government F.A.I.R. plan which is an assigned risk pool usually reserved for S. CA designated Brush Fire Zones where no company would insure the home i.e.: Malibu that burns every other year.
• Fair covers dwelling and loss of use for fire on a Tuesday. $5K minimum you have to buy a “Wrap Around” policy which excludes fire for liability, theft etc. for $2K extra.
• Call us early we often go to outside wholesalers/general agents which can take 2 weeks.
• Travelers non-renewed a S. CA client of ours 10/31/19 with 30 day notice. We tried to get him a policy for #10K more than last year. Saddle fire started September ongoing fire moratorium shut down all companies until fire was 100% contained. Catch 22.
• Rumors are that major national carriers have had it with CA 2017, 2018, 2019 fire losses. If the big 3 are close to new business it contains. If 50% of the CA home market closes all the dominos will fall. It will be 1995 all over again.
• Northridge Earthquake CA used $12 billion insured losses. 1998 Loma Prieta was only $650M insured losses which was bad. 2 years premium. Northridge $12 billion put companies out of business and threatened ALL of the others.
• 95% of the home insurance market closed for 3 years. It’s coming again. This happened in Florida with wind losses. Now CA has Earthquake and Fire. We are headed to real trouble soon.
• Umbrellas for non-good drivers are raising requirements.

Uninsured motorists on your Umbrella are even harder to get. If I am driving down the sidewalk one day and disable you for life? How much would you sue me for? Collect up to $2 million from your own company for $150 a year. Ask your current agent for the coverage. Oops, they don’t offer it. Call us, we can. I have $3 million for the guy I hit and $ million for me and mine. 99% will be under-insured since my limits are the max of $2.5 million. 

Flood insurance 10 years ago there was one choice, F.E.M.A. National Flood Insurance Program (NFIP). $30 billion in debt the government has now allowed private non-government flood insurance. If you are in a 100 year flood zone NFIP rate in Palo Alto is $2500. Private Insurance with us is $1250. This is on a primary residence. Owner occupied means a voter. Weak politicians refuse to change the real rate. 

But Rentals and Vacation homes are not protected. NFIP rates are $3000-$6000. We are still at $10250. NFIP sends proof of primary residency demands annually. Can’t produce pay, pay, pay….. Can only be changed at renewal and you do not pay the NFIP Renewal, otherwise no refund. No kidding. 

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