HOMEOWNER’S INSURANCE - CHALLENGES & SOLUTIONS

If you have not heard about or personally experienced the recent issues with homeowner’s insurance in California, it is only a matter of time before you or a family member may be faced with unexpected challenges due to the changing landscape in this industry.

As an active Realtor in Santa Barbara, I have witnessed a dramatic change in homeowners’ insurance over the past few years. Due to many of the major companies canceling existing policies and/or not writing new ones, the cost and availability of homeowners insurance have been severely affected.  In some cases, buyers have attempted to renegotiate the sales price or cancel a purchase transaction once they receive an insurance quote that far surpassed their expectations. Others have been essentially forced to accept a less-than-desirable policy from the state-run insurance pool referred to as the California Fair Plan.

 The “insurance crisis,” as it is referred to in certain circles, has also created anxiety for those of us who have existing policies with affordable premiums.  I will share my own recent experience which may sound familiar to some of you and serve as a warning to others. Last November I received a renewal notice from Farmers letting me know that my yearly premium was changing from $2000 to $9500!  After experiencing a series of emotions ranging from disbelief to infuriation, I called my long-time insurance agent who informed me that there was little I could do other than hope things improve before the next renewal in a year.

Fortunately, because of the assistance I have provided my real estate clients with all aspects of their transactions over the years, I had some knowledgeable insurance brokers in my database.  A few of the brokers I spoke with sympathized with my situation but were little help other than to suggest a hybrid policy utilizing the California Fair Plan which did not provide much relief from my new Farmers premium. One of the brokers, however, gave me invaluable advice even though he could not help me directly.  He suggested contacting USAA if I had a military connection in my family or AAA if I had an existing membership. Thankfully, due to my long-time affiliation with AAA, I was able to get a policy through them that was almost identical to my original Farmers policy and resulted in an even lower premium by moving over our auto insurance as well.

Although many of you may already be aware of the California insurance crisis, I thought it was important to share my story with the goal of providing some insight to Santa Barbara homeowners who are faced with similar challenges. I am happy to be a resource if you are interested in exploring any of the options that I did, however, my hope is that this article provides valuable information that can lead to positive solutions in the ever-changing landscape of homeownership in Santa Barbara.

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