Marc Cuniberti: On fire insurance
The very mention strikes fear in the hearts of homeowners. With the recent catastrophic wildfires wiping clean whole neighborhoods, an unprecedented situation has arisen not only in the scope of the destruction by those affected, but in the environment that California homeowners find themselves in obtaining fire insurance to protect their residences and businesses.
Facing skyrocketing claims at saturation levels seldom witnessed, insurance companies are pulling back their exposure to high fire prone areas by cancelling in masse’ homeowner policies.
Nevada County’s beauty comes from being surrounded by trees and it’s also the very cause of its insurance problem.
Home and business owners are finding cancellation notices arriving in their mailboxes. Regardless of loyalty or claims history with a company, the notices keep coming with seemingly no consideration for any other factors. Basically if you live here and your home happens to be in a designated brush area, expect a cold hearted letter to arrive in your mailbox.
Few have been spared. Regardless of the amount of tree work you’ve done, or open space that surrounds your house, if you’re on a specific spot on the map (and there are many such spots) you’re probably going to be scrambling for a fire insurance policy.
With such wide spread problems, there is likely to be misinformation, wild claims and exaggerations, some name calling and a host of upset homeowners.
And there are.
The basic question now being asked is where can I find fire insurance and how much will it cost?
The answer can be distilled down to a simple answer for most. You will be able to find a policy somewhere and yes, it’s probably going to cost you more. In some cases a lot more.
As in any screwy situation like what exists currently in the homeowner’s insurance arena, there is no steadfast rule as to what to expect. As a licensed insurance agent, and one deeply entrenched in social and news conduits, I have seen little that resembles normalcy. I can say the stories run from ridiculous to unbelievable to situations that almost appear almost like little has changed.
Some claim they can’t get any insurance at all (usually untrue) to claims they actually paid the same or even less than before (usually untrue as well).
From my recent experience, and probably like almost all agents in Nevada County and California for that matter, the intensity of the situation is as new to us as it is to you. The phones are ringing nonstop as consumers scramble for coverages.
Experienced agents know coverage is possible for most but that coverage is also going to cost more. In many cases, I see costs rising from 200-250% of previous premiums. Those claiming their premiums stayed the same or went even down may not have looked at their coverages closely.
It’s a rapidly changing environment. The common belief is the insurance companies are immersed in a Frankenstein-like confusion of an untenable situation. Some say it’s all one big grand experiment in what has to be done and what will be done forced upon all of us by necessity caused by the workings of Mother Nature.
The questions being when you get a policy (usually not if), how much will it cost and what sort of coverage will I get. If God forbid my house is obliterated in a catastrophic fire like the ones witnessed in recent years, will the insurance companies be able to handle the onslaught of claims in a timely and efficient manner. These are questions that are difficult to answer.
Lord knows the insurance companies, much like the agents, are bombed with fire policies applications. They are also bombed with claims. Having to settle hundreds of homeowner claims as whole communities get incinerated is no easy task, and likely not a cheap one for the insurers. Hence the cancellations.
Remember insurance companies, like most companies, exist to provide a service and make a profit in doing so. If the profits burn up in a wildfire along with the homes they insure, they are within their rights to pull back from the market. In other words cancel you.
The good news is there is an entity called Cal Fair. From Google: “The FAIR Plan is an association located in Los Angeles comprised of all insurers authorized to transact basic property insurance in California”
In other words, Cal Fair is made up of many of the same companies that cancelled you but assembled in conjunction with the Department of Insurance to provide insurance that otherwise is not available. Much like the assigned risk program for problem drivers, you could say Cal Fair is for problem home policies, and in this case the problem is wild fires.
I’ll cover how Cal Fair works and the subsequent coverage issues in future articles. Just know for now, you will likely have little problem in getting a fire policy. Contact a licensed insurance agency for assistance and yes, they are busy. If you find you’re not getting a call back, try another agency. There are a host of reputable agencies and agents in Nevada County that can help.
This article expresses the opinions of Marc Cuniberti and should not be construed or acted upon as individual investment advice. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at SMC Wealth Management, 164 Maple St #1, Auburn, CA 95603 (530) 559-1214. SMC and Cambridge are not affiliated. His website is http://www.moneymanagementradio.com. Mr. Cuniberti is a licensed insurance agent. California Insurance License # OL34249
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