Numerous residential insurance companies have stopped writing certain policies, most recently it is State Farm cancelling the insurance of approximately 42,000 apartments. This affects anyone who owns units they are not living in if they have a State Farm policy.
In spite of State Farm's cost issues of coverage on claims, catastrophes, reinsurance and decades of working with old insurance regulations, "State Farm recently reported a net worth of $134 billion, up $3 billion from the year before. The state insurance commissioner says that raises serious questions about its financial situation — questions the company must answer to regulators." But supposedly the claims payout is $1.08 for every dollar taken in on premiums in California. Read more here: https://www.nbcbayarea.com/news/california/california-homeowners-insurance/3492251/ As the article states, you must receive at least 60 days notice of cancellation from your insurer. And, by the way, water claims are always a sensitive subject, it's better to avoid them if at all possible.
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| House sitting at edge of eroded beach |
For buyers and sellers of residential or income property, it's important to find your insurance coverage very very early in your transaction. Long gone are the days when a buyer could line up insurance coverage 7 days before closing. In the current market, buyers must make sure they can get coverage within a few days after going into escrow, if not before. Some people (in fact, many people) are turning to the California Fair Plan, but it is now inundated with requests. A prospective owner is better off turning to either their current agent if they can work with outside carriers, or start searching multiple insurance sources. One source to turn to is the website for the Insurance Commissioner. What, you don't like this guy? Forget it, what's important is finding ways to meet your insurance goals. It's tough, you probably will end up paying more (as we all are anyway) than your current policy, and different coverage (I already received notice of less coverage on my earthquake policy from the State), but it's important to get it to meet your goals and satisfy your lender's requirement to be covered.
Someday, I believe, the crisis will be past us, or at least the worst of it.
Julia Huntsman, REALTOR, Broker | http://www.abodes.realestate | 562-896-2609 | California Lic. #01188996
