California ranks top among the states that are at extreme risk of wildfires. For instance, per the Center for Disaster Philanthropy (CDP), in 2020, California wildfires accounted for 40% of all recorded wildfires in the U.S. Consequently, the cost of fire insurance in California has increased significantly in recent years. Worse still, due to a large number of claims, insurance companies have dropped most policyholders living in wildfire-prone areas.
Keeping this in mind, here are five tips on how to afford fire insurance in California.
Shop Around for Fire Insurance
According to the California Department of Insurance (CDI), there are currently over 1,500 registered insurance companies in the state. While the government regulates the cost of insurance, the cost of fire insurance generally varies from insurer to insurer. For this reason, you should shop around and compare different quotes.
Consider Non-Admitted Fire Insurance Carriers
In 2019 alone, insurance providers in California failed to renew at least 235,000 home insurance policies. While an insurer can drop you for reasons such as failing to pay premiums and fraudulent activities, in this case, rampant wildfires are the major reason for the massive non-renewal of homeowners insurance coverages in California. If you need fire insurance, yet your home is located in a high-risk area, consider purchasing it from non-admitted carriers. It is important to note that non-admitted carriers do not fall under the oversight of the state’s Department of Insurance, meaning their operations are unregulated. Although non-admitted carriers don’t guarantee settlement of claims in the event of bankruptcy, they offer affordable coverages, especially when the risk is so high that other insurance companies won’t provide coverage. Even so, you will be unable to appeal to the California Department of Insurance in case the insurer handles your claim process unfairly.
Call the California Insurance Helpline
If you’re struggling to find a policy that meets your needs and budget, you can call the California Insurance Helpline for assistance. While the Department of Insurance will not provide fire coverage for you, they will help you make a good decision by giving you access to information. Basically, the primary functions of the Department of Insurance include, among others:
- Overseeing insurance regulations
- Protecting policyholders
- Educating consumers on matters of insurance
- Promoting stability in insurance in California
This means that you can call the Insurance Helpline and report an admitted insurance carrier if they charge you more than the maximum allowable amount. Additionally, you can call to inquire about insurance providers that sell fire insurance at affordable prices.
Opt for the FAIR Plan Fire Insurance
The California Fair Access to Insurance Requirements (FAIR) Plan is an insurance policy that the government offers to people who can’t find coverage elsewhere due to extreme risk or too-high premiums. Although it does not provide exclusive coverage, it is a good option if you can’t afford other policies. Take note that this plan is limited to $1.5 million worth of coverage, which may not be enough to cover the rebuilding cost in case of fire damage.
Ask for Discounts
Most insurance companies usually give out discounts to their loyal customers, especially those who have all their insurance coverages from the same insurer. This means that bundling your insurance policies can possibly earn you some discount on your fire insurance coverage. Additionally, mitigating the risk at hand can make the insurer reconsider the cost of your insurance coverage. This is because the amount of premiums paid usually depends on the size of the risk at hand. For instance, ways to mitigate the risk of fire damage in your home include, among others:
- Installing a smoke alarm
- Having a fire extinguisher within reach
- Building your house using fire-resistant materials, such as stone
While wildfires usually burn millions of acres, the damage to your home can significantly decrease if you fireproof it. This way, the insurance company will only pay for the cost of repairing the damage done instead of rebuilding your house. Whatever improvements you make to your home, ensure you inform the insurance company of possible adjustments on your premiums.
What Can You Expect from California Fire Insurance Prices
It is normal for insurance companies to charge high premiums where high risks are involved. Since wildfires have made California a high-risk zone, expect to pay high premiums, especially if you have a larger coverage. Take note that since there is no standalone fire insurance, your homeowners insurance policy is what will cover damage from wildfire. Even so, increasing your coverage limit is a sure way of protecting your home from all kinds of disasters, including, among others, wildfire, water damage, vandalism, and theft. If you already have fire insurance in California, your insurance provider can drop you if you have made too many claims within a short period.
To find fire insurance coverage in California that meets both your needs and budget, the team at Hoffman Brown Company is ready and waiting to help you find reliable and responsible insurance for your property. As an independent insurance agency serving homeowners across California, we are well-versed in finding homeowners the insurance policies they need and deserve. Whether you have high-value belongings, a high-value home, or both, we can help. Contact us at (818) 986-8200 to get started.
