Homeowners Insurance: The Latest Hot Button Issues

State Farm and Farmers recently stopped selling new homeowners’ insurance policies in California. Meanwhile, some of the 115 other insurance companies who are still writing new policies have introduced significant changes to their underwriting practices, and many are reducing coverage based on a number of issues. The Hot Buttons Issues Age of the building (pre-1925) Age of the roof (older than 15 years) Electrical wiring (knob & tube) Occupancy (tenants present) Any previous claims on the home, regardless if it was paid out Replacement costs of $2M+ The Fallout Insurance is a requirement for mortgage loans, so the lack of insurance options may impact people's ability to buy. In a market that is already challenging due to high interest rates, a limited supply of homes, increased competition and higher housing prices, some buyers are denied insurance or forced to pay higher premiums. Some face renovation requirements, causing delays in transactions. And the insurance issue is not only limited to real estate transactions. Even some existing homeowner policies are getting cancelled, despite having no history of any claims.😯 What Steps to Take If you already own a home, or you're thinking about selling your home, you can avoid any insurance surprises by taking the following steps: Regularly Maintain the Home: Keep the home in good condition by performing regular maintenance tasks such as repairing leaks, replacing the roof, updating electrical systems, and addressing any structural issues. Insurance companies may inspect the property before providing coverage. Install Safety Features: Enhance the safety of the home by installing security systems, smoke detectors, and deadbolt locks. These measures can reduce the risk of theft, fire, and other potential hazards. Upgrade Electrical, Plumbing, and Heating Systems: Outdated electrical, plumbing, and heating systems can pose risks. Upgrading these systems to modern standards can make the home safer and qualify for insurance coverage. Bundle Insurance Policies: Some insurance companies offer discounts if you bundle multiple policies, such as homeowners and auto insurance, with them. Inquire about potential discounts to reduce the overall cost of insurance. Maintain a Claims-Free History: A history of frequent claims can raise red flags for insurance companies. Try to minimize unnecessary claims and only file claims for significant damages or losses. Don't Miss a Payment — or you may find yourself among California’s uninsured. If you're a buyer, check with an insurance agent prior to making an offer to make sure what coverage options are available and/or include an insurance contingency in your purchase offer. The Future It is unclear if other insurance providers will also withdraw from the California market. Overall, the impact of these changes will become more apparent over time, and it is expected to make homeownership more expensive, particularly for entry-level buyers.

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Compass is a real estate broker licensed by the State of California operating under multiple entities. License Numbers 01991628, 1527235, 1527365, 1356742, 1443761, 1997075, 1935359, 1961027, 1842987, 1869607, 1866771, 1527205, 1079009, 1272467. All material is intended for informational purposes only and is compiled from sources deemed reliable but is subject to errors, omissions, changes in price, condition, sale, or withdrawal without notice. No statement is made as to the accuracy of any description or measurements (including square footage). This is not intended to solicit property already listed. No financial or legal advice provided. Equal Housing Opportunity. Photos may be virtually staged or digitally enhanced and may not reflect actual property conditions.

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