Watch out, your insurance carrier may have changes ahead for you:

California here I come, Fair Plan, that is.

Insurers racked up billions of dollars in fire-related claims. There were temporary moratoriums on the writing of fire insurance policies. Now Carriers are looking for ways to change underlying limits or cancel policies for properties in brush areas.

Keep an eye out for changes to coverages.  Zip codes are being declared brush areas and can affect homes that are no where near the actual brush. Why? Insurances carriers have been hit with smoke damage claims.

Due to the recent wildfires, many of the homes in the foothills of our communities have been or will be put into California Fair Plan. Many people are not aware of the extent of the changes to their coverage. Insurance agents who can’t continue to write the policy aren’t motivated to explain those differences to you.

When a homeowner’s policy is changed to California Fair Plan, it becomes a very basic policy.  It does not automatically include water damage, liability, vandalism, theft or other coverages that were included in the prior policy.  Once a homeowner’s policy is changed to Fair Plan, some insurance companies do not offer all these additional coverages.  Some, such as Allstate, stopped writing new policies years ago. Others, such as Farmers and State Farm, became choosier about homes they’d cover. The homeowner needs to obtain additional coverage. The homeowner has to be pro-active. It might be necessary to change carriers to maintain adequate coverage for all perils.

  • The FAIR Plan is the insurer of last resort and provides only basic property insurance.
  • Fair Plan covers up to a maximum of $1.5 million for the structure and its contents. For many homes, that’s simply not adequate.
  • Shop around at least annually for coverage with insurers other than the FAIR Plan.
  • The insurance marketplace changes regularly, so a property not eligible for coverage in the past may be eligible now or vice versa.
  • Request an onsite visit by the underwriter. Ask about ways to make your home acceptable for a regular policy: examples are changes to the roofing material, enclosing eaves and removing overhanging tree branches.
  • Ask your neighbors who insures their properties.
  • Ask your insurance broker to try to find you more comprehensive coverages than Fair Plan.
  • Call other insurance companies on your own.
  • Do not rely on just one source for your insurance information.
  • If you cannot secure a single policy with another insurer in the standard market, consider purchasing an additional policy to cover types of losses that are not covered (Difference in Condition Policy).
  • Update the amount of dwelling coverage. Make sure it’s enoughto actually replace the structure (including foundation) in the event of a loss. Remember the prices of construction & materials can rise dramatically, especially during larger disasters like the recent fires.
  • Understand your policy and its limits. Read any letters you receive. Big changes to your policy could be hidden in the fine print.