With fires, earthquakes and heat waves, insurance has been a hot topic in our market.
How can you get proper insurance coverage? By staying informed and up to date on new guidelines and rules. For instance, did you know that some insurers are refusing to renew existing homeowner insurance policies if the house has a roof that’s older than 20 years? This applies no matter what your roof is made of … wood, cement, composite shingles … if it’s older than 20 years, you might not get coverage.
In some cases, I advise my clients that it might pay to get a new roof installed, because this can certainly be an issue if the house gets into escrow. We’re dealing with a situation right now where a home has a 30-year wood roof and the buyers are having to get “last-resort” insurance, which can be quite pricey.
So, your roof is one consideration when it comes to insurance. Another? Location. About three-quarters of California is considered to be in a “high fire zone,” which has caused many large carriers to leave California, making it even harder to find insurance. Plus, even if you’re not in a “fire area,” a lot of insurance companies are now considering anything south of Ventura Blvd. and north of Sunset to be a fire area. Even if there was never a fire on your street or in your neighborhood, the location can still be deemed a high fire hazard zone.
Luckily, at Berkshire Hathaway HomeServices California Properties, we have the benefit of working with HomeServices Insurance Agency, which makes it easier to secure a solid plan, though it’s always recommended to give yourself enough time to find the policy that’s best for you.
Here’s another key fact: When you have a loan, you must have homeowners insurance that covers the cost of rebuilding the house in case of an unexpected emergency like an earthquake or a fire. This insurance protects the lender, who doesn’t want to get stuck with a burned-down home they can’t sell, and again, it’s a requirement for any homeowner with a home loan.
If you don’t have a loan some people “self insure,” meaning they bank money for potential disaster repairs vs. paying private insurance. It’s an option but a gamble! Another option if you don’t have a lender and you paid in cash for your property, is to get basic California Fair Plan Insurance, which is needed in high-risk areas. If you live in the “flats,” you can purchase regular insurance. But in high-risk areas, it’s more difficult to find coverage, so California Fair Plan Insurance is often the best way to go.
Primary homes, second homes, long-term rentals, short-term vacation rentals, condos, townhomes, vacant homes, manufactured/mobile homes and commercial buildings are all eligible for California Fair Plan Insurance. The plan covers: fire and wildfire, lightning, smoke, internal explosions, and ordinance or law.
However, there is a caveat to California Fair Plan Insurance: it covers up to $3 million for replacement cost. It does not include personal content or the cost of temporary housing. Because of this, a lot of people must get a wraparound policy that covers personal content and relocation costs.
There are so many aspects and nuances to insurance, and it’s critical you work with not only a reputable insurance agent but also a trusted real estate professional who can inform you about potential environmental hazards and help consult on the best options for you.
I have a client who has owned their home since 1980. Despite my client never making a single claim in almost 45 years, the policy is still being cancelled because the company is no longer covering that area.
The bottom line: Work closely with your real estate agent when buying a house or, for homeowners, if you’re coming up on insurance policy renewal. Don’t wait for the week your insurance expires to figure out what comes next! You need time to shop around and figure out what policy covers your specific needs. If you have a loan, homeowners’ insurance is required, and your loan could potentially get pulled if you don’t secure insurance. Make sure you’re covered early to facilitate a successful transaction and to stay safe!
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Andrew Manning • REALTOR® • Berkshire Hathaway HomeServices California Properties • DRE: 00941825 • 818-380-2147 • andrew@andrewmanning.com