Homeowners insurance in California

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Homeowners insurance in California

Will my homeowners insurance policy be non-renewed?

The California Department of Insurance provides insurance companies with the ability to review risks and exposures each year to ensure they conform to their current underwriting guidelines. In 2018 alone, there were over 8,527 fires that destroyed over 1,893,913 acres. There is a possibility that due to these losses, your homeowner insurance policy may be non-renewed by your carrier, if it no longer meets the eligibility guidelines they file with the state and have approved by the Department of Insurance.

Will the premium I am paying on my homeowner insurance policy increase?

Premiums are determined based on various factors including the size of your home, year built, the amount of insurance you have, the location of your home, your loss history, as well as the overall claims exposure and paid losses your insurance company has had.  As of May 2019, insurance claims paid out due to the 2018 wildfires exceeded $12,000,000,000.  Based on the catastrophic nature of these losses and claims paid, you should expect the rate you pay for your homeowner insurance to increase.

What is a non-admitted insurance company?

A non-admitted insurance company is an insurance company that has not filed its rates and underwriting guidelines with the California Department of Insurance and therefore is not licensed to provide insurance products in the state. Note that not licensed does not mean unregulated and such insurers can nevertheless write coverage through excess and surplus lines brokers licensed in the state. They must meet certain criteria to become an approved non-admitted market in the state and be allowed to offer policies.  You may see a list of insurance companies that are approved by checking on the Department of Insurance’s List of Approved Surplus Lines Insurers (LASLI) list. 

What does the California FAIR Plan Association cover?

The California FAIR Plan is an insurance association comprised of all insurers authorized to transact basic property insurance in California. It was established under Insurance Code statute Section 10091 in August of 1968 to offer coverage to high-risk homeowners who have trouble obtaining coverage through another insurer.  It has no public funding or taxpayers’ monies and is not a state agency.  Arguably, it is stronger than any single insurer since it has the financial backing of all admitted insurance companies writing property insurance in California.  Some of the coverage that is available from FAIR plan is fire, lightning, smoke, and internal explosion. Optional coverage may also be purchased when available for windstorm or hail, explosion, riot, aircraft, vehicles and v andalism or malicious mischief.  Most notable omissions from a FAIR Plan policy include but are not limited to liability insurance, workers comp coverage, water damage coverage and theft of property.

What is a DIC insurance policy?

When discussing an insurance policy in California, a DIC policy st ands for Difference in Conditions.  It is an endorsement or amendment to a st andard or preferred homeowners insurance policy that removes the peril of fire from the covered causes of loss list.  A DIC policy is purchased in conjunction with a fire policy from the California FAIR Plan Association in order to add in the liability, workers comp, water damage and theft coverage.  The two policies go h and in h and to provide coverage for consumers who are unable to secure a st andard homeowner policy in the marketplace.

Wildfires are Scary so I have Home Insurance

I do not have to worry about wildfires destroying my home because I have a home insurance policy . My agent recommended that I made sure I asked for replacement cost of my home , not the cash value of my home . My policy will cover fires inside and outside the home such as a wildfire.

I live in a zone of the United States that is prone to wildfires, so I had my agent and an endorsement to my basic policy for additional coverage. This costs me only pennies more per month , and I am secure in the knowledge that I am well covered .

My homeowner’s policy will pay for living expenses while my home is rebuilt or repaired . If there is a wildfire in my area and the fire does not damage my home , but the smoke and soot did damage my policy will pay for repairs and cleanup.

Be sure you have the right homeowners insurance to protect your home from wildfires
Be sure you have the right homeowners insurance to protect your home from wildfires

This wildfire endorsement will cover over and above of what my basic coverage pays . This policy does state that it will not pay for extraordinary circumstances such as a, bar-b-q gone wrong , or a fire pit not constructed safely resulting in major damage to my home .