Home Insurance: What To Do?

California is experiencing a home insurance crisis, with two of the biggest insurers State Farm & Allstate leaving the state and Farmers tempoarily pulling back underwriting new policies in wildfire-prone areas. As a result, many California residents are left with little to no options for homeowners insurance — particularly those with homes in areas most at risk of wildfire damage.

Let's first start by saying that  if you’re already a policyholder with State Farm or Allstate, don’t panic! Your coverage isn’t going anywhere. “It’s important to note that current customers will not lose their insurance,” wrote Michael Soller, deputy insurance commissioner at California’s Insurance department, in an email to CalMatters. But if you’re shopping around for new home insurance, you’ll now have less options to choose from.

While there is no doubt that obtaining coverage in high risk areas of the county can be difficult, it’s certainly not impossible. The California FAIR Plan Property Insurance is one resource that specifically deals in covering properties in these high risk areas. However, it does come with a caveat, and that's the price! You could be looking at a significantly higher premium than you would normally expect.

So, what should you do? We highly recommend that all our clients speak to a local insurance broker who is familiar with the problems posed by these high risk areas. They can shop it around for you and find the best deal available, which may or may not be on the FAIR plan. For a list of preferred Insurance Brokers please reach out to us directly.

If you’re financing your home purchase through a bank or mortgage lender it will be crucial you check that you can get coverage, and how much it’s going to be. Lenders won’t fund a home that does not have insurance and you don’t want to discover this in the 11th hour when your deposit is on the line. Also make sure the monthly premium doesn’t alter your debt to income ratios to the point you can’t qualify for the loan. We are advising all clients to have a contingency in place in these high risk areas that the purchase is subject to obtaining insurance, and at a reasonable premium.

If you’re looking to buy a home in Sonoma County, don’t let these changes deter you. Reach out to us and we’ll guide you through every step! Click here to contact us.

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