Fire Insurance Info

December 2024 - most updated information

California has enacted "Safer from Wildfires" regulation that requires Insurance Companies to provide discounts to homeowners within Firewise Communities.  Unfortunately, this does not necessarily mean that you will save money as the Insurance Company may require costly upgrades to your property before granting the discount.  

However, if you are interested in pursuing this, these notes from Cheryl provide information from NFPA on how to proceed.

United Policyholders (UP)

Keeping your home protected when insurance options are limited and expensive.

United Policyholders recently held a webinar sponsored by Cal Fire about how to acquire insurance in California when options are limited.  UP is a nonprofit that since 1991 has helped people in all 50 states prepare for emergencies with access to information on insurance.  Their website, United Policyholders, has extensive information regarding insurance of all types.

The complete webinar video is available for viewing HERE.

Cheryl Thompson took extensive notes that summarize the video; they are shown below.

CA laws to protect homeowners:

-   Insurance companies can’t drop you for 1 year after a fire in the area; or 2 years after your home is lost due to fire. Go to insurance.ca.gov ,  put in your zip code to see if a moratorium is in place. (i.e. when that 1-year period began)

-   Insurance companies must give you 75 days-notice before your policy expires if you are to be nonrenewed (use this time to shop around). If you get <75 days you can call a hotline (CDI agency) and they can force the company to at least extend coverage.

-  If sent a non-renewal letter, the company is supposed to give a specific reason but some may use more generic responses.

Insurance broker

-   A good consumer-oriented agent/broker has never been more valuable (to find an insurance company and the best price). Avoid underinsuring your dwelling: aim for replacement value including coverage for building code upgrades; and an additional replacement rider.

-    Helps to tailor policies, and seek reliable non-standard/non-admitted insurer options.

-    Often personal property is overpriced, a broker can help adjust more appropriately.

-    Consider small, medium, vs large loss – makes a difference when trying to recover personal property.

-    A high deductible doesn’t necessarily give much benefit in small/medium loss incidents.

How to tell if agent/broker has their best interests versus earning a commission.

-        Need good dialogue that the policy is best option.

-        Need an agent that will guide you to a better option if one comes available. 

-        After a wildfire, 2/3 of consumers were underinsured (in UP’s experience)

-        Many agents are not comfortable working with non-admitted insurers or the Fair Plan. Be sure to choose someone that fits your need (by asking questions).

-        Not all agents have access to all markets.

Installment payments

-    Some insurers have stopped allowing this option (more on the auto side)

-    CA Fair Plan is working on monthly payment options

Bundling – is that a benefit?

-    Some carriers only write a policy if combined with auto etc. A benefit for reduced premiums in some cases.

-    if a DIC policy, bunding can help with overall cost of insurance.

-    15-25% off home policy in most cases if you bundle auto with a national insurer

Home Insurance essentials

-    Dwelling “coverage A” limit should be enough to replace your home with one of similar size and features. Ask local builders about replacement cost. Choose replacement coverage over ACV (cash value). Add extended replacement coverage.

-   Building code compliance/upgrade coverages

-    Adequate dwelling and ALE limits

-    Know what is excluded: e.g. flood, mold etc

-    Be aware of common sub-limits and caps – may need to add a rider/supplemental coverage for certain possessions

Adjust Coverage A limit upwards or buy an extended replacement coverage rider?

-    The group agreed, you need an extended replacement rider (go for 150% replacement rider)

-    Ruth Stroup uses the “Bank the difference formula” – What is the diff between the deductible and premium? How many years would it take to bank the difference? For home insurance, if within 5-7 years, then she thinks it could be worth taking that level of deductible. Still a personal/individualized choice.

CA FAIR Plan (a temporary safety net)

-        Coverage through the Fair Plan can be an option – pair with difference in conditions (DIC) insurance that can fill gaps in a CA Fair Plan policy.

-        Personal property coverage is ala carte.

-        Phil Irwin (has own agency Eldorado County) Public Relations Rep for the Fair Plan

-        Private association comprised of all insurers licensed to write property insurance in CA.

-        Will insure any home in CA if not vacate > a year, and has no illegal activities taking place

-        Dwelling now up to 3 million

-        Fair Plan covers fire, internal explosion, wind – need to combine with another policy for other hazards

-     California Fair Plan link

-        Fair Plan – current litigation as it doesn’t offer comprehensive coverage

-        Add-on options: extended coverage for windstorm/hail, rot, vehicles; vandalism, replacement cost coverage, contents, optional increase of fair rental value, code upgrade coverage, debris removal, other structures.

-        DIC/Supplemental policy. Everyone agree you should have a DIC/Supplemental policy if have Fair Plan