With the ever-changing landscape of Insurance in California, I wanted to bring to you all the latest.
I had the pleasure of sitting down with Kelly Weiser and her team at The Weiser Agency recently and I hope the following information gives you some insight into insurance changes and what is coming for Santa Barbara insurance.
Thank you to Kelly and the team for this great info.
What is the quick rundown of insurance in Santa Barbara?
Insurance is definitely much more of a conversation now than ever before, and not necessarily for the best reasons. While we and others are still able to find solutions for home or general property insurance in Santa Barbara, we’ve adapted to become very creative in doing so since traditional insurance companies are rarely available.
Thankfully, we haven’t had any significant events locally in over five years, and that does help. In that same time period, though, we’ve had many large fires in California, and the cost of materials has risen significantly. This has made many insurance companies hesitant to do business in our state, and we’ve been impacted locally.
What is the California FAIR Plan?
If traditional insurance companies decline to insure a property, then homeowners can turn to FAIR Plan. While most people think of the FAIR Plan as providing coverage only in high-fire-risk areas, and it definitely does do that, others turn to FAIR plan if they are not eligible for traditional markets due to prior claims.
The state of California established FAIR Plan in the 1960s to provide all property owners access to basic fire coverage. Coverage through FAIR Plan is limited to $3 million for all line items, though, so it may not be ideal for all properties in our market. However, it definitely can provide a solution when others decline to offer insurance.
What legislation and agreements have been made recently in regard to insurance in California?
Recently, the California Department of Insurance (DOI) reached an agreement with many of the traditional insurance companies in California whereby the insurance companies agreed to consider offering to insure homes in foothills and other areas that have been considered high fire.
In return, the DOI would allow companies to request a higher rate increase than in previous years. (It’s historically been capped at 6.9%.) Carriers have about 12-14 months before they need to comply with this agreement.
So if these new carriers can cover you at what costs they deem appropriate, then you cannot access the FAIR Plan? Explain?
Correct. If a traditional, admitted insurance carrier offers to insure a property, then FAIR Plan is not an option. The FAIR Plan was designed to be a last resort for insurance.
While time will tell, this may result in situations where a client’s annual insurance costs may be higher through a traditional carrier vs. FAIR Plan since these carriers may be able to request higher rate increases than before.
What are Firewise communities? And do we have any in Santa Barbara?
Firewise is a national program that neighborhoods can voluntarily agree to participate in.
Neighbors start by surveying fire risks on their street and looking for how many homes have things like tree branches close to roof lines or flammable bark mulch.
Then the community works with the local fire department to develop and implement wildfire mitigation plans.
We have about 10 Firewise communities in our area, including Mission Canyon, Painted Cave, and San Antonio Creek. The insurance commissioner has asked insurance companies to strongly consider offering coverage to communities that have this certification so it could be a way to help increase insurance options in the future.
When should buyers, sellers and their agents contact you about a new property?
As early as possible. And as frequently as they can. Even if a client is just considering making an offer on a property, or an agent is competing for a listing appointment, starting on insurance early is always great.
Until about two months ago, we’ve often been able to turn around an insurance quote in about 24-48 hours. In today’s market, some carriers are taking 14-25 days before providing a formal quote to us, which can really slow things down.
For an industry that hasn’t historically been known as fast-paced, the insurance options are changing almost weekly so it’s always good to check and double-check.
How many carriers do you have access to?
About 60, and we’re constantly looking to add more. We just got access to a new company last week that’s already produced some strong options for clients so we’re always on the lookout.
OK, bring out that crystal ball you have been hiding. Where do you see insurance coverage going?
Insurance will be a challenge for the next year or two, and creativity will be key. It’s definitely cyclical, though.
We are in a market that’s very desirable for insurance, so I do expect that the traditional carriers will return here sooner than other parts of the state.
I’m also optimistic that public and political pressure will continue to force the insurance companies and the state to create more options for clients over the next few years.