Homeowners Insurance in California - Some Answers

We have all been hearing scary news recently about getting insurance on our homes. In California wildfires have caused some insurers to pull out of the state or, like State Farm, announce that they will no longer write new policies in California. As a homeowner and a real estate agent serving California homeowners, I have a lot of questions. I decided to ask Alexandra Trent, of Goosehead Insurance, for her advice on getting insurance in California.

Alexandra is an insurance broker representing several different insurers and as such has the ability to find insurance for almost anyone. She is the agency owner for the Goosehead office located in Sacramento. She has been in the insurance finance industry for more than a decade and before that served in the U.S. Army. When she is not with her family, she spends her time volunteering with organizations like the Natomas Chamber of Commerce as a board member.

Alexandra Trent of Goosehead Insurance

I asked her lots of questions and here are her very informative answers. I did some light editing on these for clarity.

What is the update on getting home insurance in California? Are there still companies writing insurance?

There are a lot of factors at play, but home insurance tends to be harder to source and more expensive than in previous years. There are companies that are writing insurance in California, but we have seen companies pull out or cap the number of policies they will take on.  For homeowners who have a residence that doesn’t fit into the desired risk or that are in an area where there may be a higher risk, or have prior claims, it can be more expensive or more difficult to find the coverage we have been used to.

What advice would you have for someone buying a home about getting insurance?

The best advice I would have for those who are shopping for insurance is to lean on your professional team. Your real estate team will know the area and can help guide you and identify potential issues. Most importantly they can put you in touch with a great insurance agent who can educate and run numbers so that you don’t need to become an insurance expert overnight. For any clients looking in higher risk areas, I would recommend finding out their potential insurance costs before the offer goes in by speaking with a qualified insurance agent.

In general has the cost of home insurance increased for houses that are not in fire areas? If so, how much?

We have seen across the board that most policy costs have increased for all homeowners in California, with those in higher fire risk areas seeing the largest increases. The range of increase depends on the area and the individual risk. We have seen clients who have seen modest increases of 6-10% and those with policies that don’t get renewed sometimes pay double or triple what they paid the previous year.

Are there homes that cannot be insured?

We have not seen homes that are completely uninsurable, but sometimes the cost is so high for the client’s budget that they might as well be!

If someone is having trouble getting insurance, what would be their best option?

For those having issues, I would reach out to a trusted advisor. If they know a great insurance agent that is a great place to start. Additionally, your favorite realtor or loan officer will also know who is able to place more challenging homes in harder markets.  Brokers like me usually have more options for clients and will do shopping for clients. It may end up taking more shopping on the client’s side than in previous years as well to get the job done.

You have mentioned to me before that there is a last resort for insurance for those in high risk areas. What is that?

CA FAIR Plan is the insurer of last resort in California that you will see cover homes that are harder to insure in high-risk areas. The FAIR Plan is not a comprehensive policy, so needs to be paired with another policy to cover things like liability.  Because you need two policies and more high-risk homes are covered by the FAIR Plan, the cost tends to be quite a bit higher than a standard home insurance policy.

When should someone consider flood and earthquake insurance in the Sacramento area?

All areas in California are at risk of flooding and to some extent earthquake exposures. If a client is not required to purchase flood insurance, I would recommend that they at least get a quote to see what their flood zone is so they can decide if the risk is worth insuring. The same goes for earthquake insurance. We tend to see clients less worried about earthquake outside of known fault zones than we do with flooding issues. The best thing consumers can do is to educate themselves on the risk and decide what risk they are willing to bear versus share by paying an insurance company. As we see more and more unpredictable weather patterns, I am guessing more homeowners will be concerned about these types of risks.

Any other thoughts or advice for homeowners in the Sacramento area regarding insurance?

If you have a policy you like in place: pay your policy on time, don’t let your home deteriorate, and make thoughtful claim decisions. For those that are shopping; work with trusted advisors who can help educate you without overwhelming you. Know your costs before an offer goes in and make sure that you are prepared for the reality of harder insurance markets in years to come.  The reality is that things are getting harder, but we can make good decisions together if we are well prepared through education and a little bit of elbow grease!

Thanks Alexandra. As a note, we purchased both earthquake and flood insurance for our home even though neither was required. With large rainstorms becoming more common and with our home being close to the American River, downstream from the Folsom Dam, it seemed prudent. I was actually surprised at how reasonable the rates were. However, your rates may be higher depending on the mapped flood risk for your area.

Please reach out to me or Alexandra if you have any insurance questions.