Bay Area Hills Home Insurance

Bay Area Hills Home Insurance

By: Michael A. Pallas

Current State Of The Market

It is no surprise that the last few years have been challenging for both residents of fire prone areas as well as insurers. The California wildfires in October & December of 2017 caused an estimated $10.3 Billion in insured losses and the most recent tallies for 2018 show losses exceeding $11.4 Billion.

The losses have been so severe that one carrier, Merced Mutual, was forced into Bankruptcy and seized by California. Another regional insurer,  Capital Insurance Group, suffered losses so high that they had to be purchased by a larger national company Auto-Owners Insurance. These extreme losses have caused insurance carriers as well as reinsurance companies (the companies that insure insurance companies) to rethink their position in the California marketplace.

Carriers Are Pulling Back

The aftermath of large losses, and in the case outside of the predictive modeling insurance carriers relied on, tend to lead to drastic changes in underwriting and risk tolerance. In most cases these changes are isolated to the most exposed carriers who absorbed the highest losses. However, due to the large scale and frequency in recent years all carriers have made adjustments. These adjustments are made to carriers existing books of business, which can lead to rate increases and non-renewals.

Consumers in high risk and moderate risk fire areas who are looking to purchase new or replacement policies have been shocked to  discover that premiums are drastically increasing, and in some circumstances there are no options outside of the California Fair Plan

Why Us - There Hasn't Been A Fire Here In Years!

So why are so many areas being targeted by insurance carriers that have not had large fire losses in year? The simple answer is predictability. Insurance carriers rely on models that show maximum losses for specific events, and do their best to underwrite and place business that will be profitable. However, when several events in a short period of time occur outside of models these principles are thrown out of the window.

When insurance companies are faced with greater than normal uncertainty, they generally become conservative until there is a period of lower losses or more accurate models are developed. Even though certain areas have been claims free, they have been earmarked by insurers as potential locations for the next big fire. Sometimes justified, and in others not, this is the reality that both consumers and insurance brokers are faced with.

I Already Have Insurance In The Bay Area Hills - What Should I Do?

Hold On To Your Existing Policy!

This is not the time to price shop. When the market is open, and several carriers are competing for your business it can be a great time to shop for better value. This is not the current environment. Many of the most loyal carriers are maintaining policies in areas that they are no longer issuing new polices in. These carrier relationships are gold as you may find many of your neighbors struggling with availability while you have great value with a top insurer. 

New home insurance is subject to inspection, which almost all carriers are conducting, and your policy can be cancelled within 90 days for a variety of reasons. If you cancel your old policy, purchase a new one, and are cancelled after the inspection there is a strong possibility that your old carrier may no longer be writing insurance in your neighborhood. We have seen circumstances where an individual is paying close to $6,000 with a specialty carrier, while their neighbor is paying $2,500 for a similar home just because they have been “grandfathered” in to the area.

Comply With carrier Requests 

It is very likely that carrier will start to ask for increased protections such as tree trimming and defensible space. These are both life safety and property protection precautions and may make the difference between a carrier continuing coverage or non-renewing.

Work With An Insurance Broker

Brokers have the ability to partner with specialty carriers who are willing to take closer looks at individual properties in moderate and high brush risk areas.  Agents of captive companies (pretty much all of the carriers you see spending millions in advertising on TV) can sell only products of their company and often aren’t able to provide the proper solution.

My Insurance In The Bay Area Hills Is Being Cancelled - What Should I Do?

Start Your Search Early

When you receive notice from your carrier, act immediately. It is not as easy as quoting a new policy and issuing it these days, there is a decent amount of back and forth with specialty carriers that take time. In addition, because there are so few carriers writing business in moderate and high brush areas, they have been inundated with requests so there turn-around is slow.

 

Help Us Showcase Your Property

The more information we have the better. It is our job to take the details of your home, and present them in a manner that helps underwriters to understand your individual situation. Is your house in good condition? Doe you have defensible space? Have there been extensive updates? Let us know! Better yet, provide us with pictures so we can help underwriters visualize your property. If we don’t do this, they generally rely on google earth which generally does not present the best picture in regards to Insurance in the Bay Area Hills.

 

Be Patient

This is as hard for us as it if for you, we are on the same team. As brokers, we hate when there is a lack of product availability. We feel bad when rates are increasing, policies are being cancelled, and out clients are disrupted. We work for our clients, and are in this together.

I'm Buying A Home and Need Insurance In The Bay Area Hills - What Do I Do?

Again…Start Early

When you are buying a new home we understand, there are so many things that have to be taken care of. Inspections, loan qualification, dealing with the pending move. Get insurance off of your plate early. insurance brokers do the leg work for you, so as long as we have complete information early on we can get to work while you are taking care of everything else that goes into purchasing a home in the Bay Area Hills.

Start With An Insurance Broker

Brokers have flexible product offerings and can search with many carriers at the same time. Often we are approached with little time remaining after a captive agent has engaged in the process of procuring coverage without the products to deliver. if you need insurance in the bay area hills, I highly recommend starting with a broker.

Sources

  • https://www.businessinsurance.com/article/20180802/NEWS06/912323091/Another-year-of-high-California-wildfire-losses-likely-Moodys-report-Carr-fire
  • https://www.npr.org/2019/01/28/689494921/california-wildfire-insurance-claims-total-11-4-billion-for-november-2018

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