Homeowners Insurance Update
HOMEOWNERS INSURANCE California UPDATE
As many of you know, many of the insurance companies have stopped selling new homeowner insurance policies in the State of California. Before closing escrow, you will need a homeowner insurance policy to cover the lender’s mortage liability Here is the good news, Farmers Insurance is still selling policies!
I turned to my friend, Don Lee of Farmers Insurance for the current update.
Farmers started the cap of 7,000 policies a month state wide on July 3rd and it looks like we will have capacity to write new business thru most of the month. Given current new business trends we might lose binding authority the last couple of days in July but the limit will reset August 1st so this is manageable given we have a couple of other markets to fill the gap.
In regards to home with a replacement value above $1,500,000 (houses above approximately 4,000 sq. ft.) Farmers will be placing a 25-day hold on binding these policies so they can get all of the supplemental info (they require extra photos and documentation) approved. This is not unusual right now since the other companies we have are doing the same thing. If any of your agents have larger homes in Escrow it’s going to be important to start early deciding who they want to insure their homes and get the process started. I’ve had a couple of escrows delayed when folks waited to the last minute to get the insurance taken care of on higher valued homes.
It’s very important to know how may prior claims the homes have, we are having situations where the selling party says there is one loss or they turned a claim in but no money was paid out and it showing up causing a big issue when it comes time to bind the policy. The best way to deal with this is to get a quote and have the insurance company run all of the reports to make sure there are no surprises.
Roofs are an issue, if the roof has gotten to the end of its life (it’s when the roof starts to look “bald “and the black part of the singles start to show) the only option is going to be the Fair Plan. While there seems to be a fear of the Fair Plan, it will close an escrow and the prices are not too bad. I just insured a 1,600 sq. ft. home in Inglewood for $700 a year so it isn’t a bad option for the less than great homes.
Condos are, and will continue to be, an issue because there isn’t a lot of folks writing them. Any condos with losses will be tough so tell your agents to start early on these as well.
Lastly in regards to the landslide in RPV. The newspaper stories make it sound like there is insurance available for landslides, this is not correct, there isn’t a policy available to cover landslides nor has there ever been. This is a major tragedy and there will be no property insurance to cover their losses, they might be able to find somebody to sue and maybe recover some money but it highly unlikely that any private person would have enough coverage to compensate all of the homeowners. If they can somehow find L.A. County or the City of Rancho PV was negligent then that might be the deep pocket but it will take years to sort it out. This could create issues getting insurance for properties near the slide so I’m keeping an eye out for new underwriting requirements for Palos Verdes.
If you have any questions feel free to reach out, thanks!
Don Lee – Farmers Insurance Agent
1640 Cabrillo Ave # 103
Torrance, CA 90501
License #0533775
Phone:(310) 297-2050
Fax:(310) 297-2054
Reprinted by permission of Don Lee, Farmers Insurance Agent