State Farm is no longer writing insurance policies in California. Here’s what you need to know:

• Homes with a replacement cost of $2 million and above will be the hardest to place. There are only two carriers actively writing in CA (CHUBB AND PURE), and they will require full packages (home, auto and umbrella).
• Homes with a replacement cost of $2 million and above that are DECLINED by CHUBB/PURE due to location, claims history or lack of updates will have to be placed with non-admitted carriers such as Lloyd’s of London, Scottsdale, Azguard, Vault, etc.
• Homes with a replacement cost under $2 million still have more options. Buyers are having success with Safeco, Mercury, Hartford, CIG, American Modern, etc.
• Occupancy is going to make a huge difference. Carriers are leaving space for primary homes. Secondary homes and investment properties will also likely have to be placed with non-admitted carriers.
• Homes lacking updates in challenging locations can be placed with the California Fair Plan. Many believe the California Fair Plan is a last resort option, but it is an option if all other carriers decline.

Here are some of the consequences we are seeing in the Lamorinda marketplace: 

Concerned buyers are now adding a physical inspection contingency to their purchase contracts to ensure they can obtain satisfactory homeowner’s insurance. By doing this, if they can’t find a policy they like, they can exit the contract with no consequences.  

This is disappointing for sellers who have pre-inspected their homes and done all they can to negotiate out the physical inspection contingency. Sellers want to know their deal will close vs. living in limbo until this contingency is removed.

Here’s how we can be proactive: 

Sellers: As your Realtors, we are working with an insurance broker to find out who will cover the property. Beware, it can take the insurance companies five business days to respond, so we need to do this early. Once we obtain the information, we add coverage details to your disclosure packet to demonstrate to a buyer what coverage is available and the associated cost. By doing this, we are hopeful buyers will continue to waive their physical inspection contingency. 

Buyers: Prior to writing an offer, our team can help locate insurance for you. If you can write your offer without a contingency, you will have a competitive advantage over others who still need to do their homework. The moment you like a property, please alert our team so we can work to obtain coverage. If we can’t get the information in a timely fashion, you will need to add a physical inspection contingency pertaining to insurance to your offer. 

As always, we are on standby to answer your questions!

Dana & Team