Tips for Homeowners in Wildfire Zones for Finding or Keeping Fire Insurance
Brought to you by California Association of Realtors
After several years of record-breaking California wildfires, insurance companies have responded by imposing premium increases on property owners, or in some cases, flat-out denying coverage and canceling policies. This has left homeowners with the daunting task of searching for replacement insurance. Below are some tips to help you find a new insurance plan or possibly maintain your current policy.
Know Your Rights! The insurance company must notify you in writing, at least 45 days before the policy expiration date. If it will not renew the insurance policy on your home, if you did not receive proper notice, or you believe the non-renewal was unfair—you should contact the California Department of Insurance at 1-800-927-HELP or online. You should also check to see if you’re protected because your policy contains a guaranteed renewal provision.
If you receive notice of a rate increase or non-renewal, contact your insurance company. Or have your insurance agent help you to see if there are fire-hardening steps you can take to change the company’s decision.
Start shopping for insurance early. It takes time to complete applications and obtain quotes. Insurance agents can make the task easier. Check to see if the agent works exclusively with one insurance company or has access to multiple carriers.
Check for policies written by admitted insurance companies. Only admitted insurance companies are backed by the California Insurance Guarantee Association (CIGA). They must file their rates and policy forms with the California Department of Insurance and CIGA provides protections if the carrier becomes insolvent. The Department of Insurance has a list of admitted insurance companies online.
Make sure you are not underinsured. Check whether the policy will cover the likely cost to rebuild your home in compliance with current building codes. Consider insuring your property for replacement cost value, not just depreciated actual cash value.
Compare the types of coverage and limits, and feel free to ask questions. You can compare the types of coverage and limits using the online Department of Insurance coverage comparison tool. Ask your insurance agent questions like: Will this policy be adequate to cover the cost of rebuilding my home to its pre-loss condition? Does it cover demolition and debris removal? Is there a coverage limit on my temporary rent and expenses while my home is being repaired or rebuilt? Is there coverage for my home-based business property and operations? What causes of loss are not covered?
Check surplus lines insurance options, if you are unable to obtain coverage through an admitted carrier. These carriers often provide more flexible offerings. You should investigate the overall financial strength of the surplus carrier by checking a service such as A.M. Best, to decide whether they offer a viable solution.
The FAIR Plan is available as a last resort. If there are no other options, you or your insurance agent should contact California FAIR Plan at 1 (800) 339-4099. The policies can be expensive, and they only cover certain losses caused by fire and smoke. For other perils such as theft and liability, you will need to buy differences in conditions insurance to fill the gaps. Again, you can find a list of these carriers on the Department of Insurance website at http://www.insurance.ca.gov.
