What to ask first?

 When looking to buy property, the first question you should be asking, “ Can I get insurance coverage?”

Yes, let’s talk about property insurance. It’s become the biggest obstacle to overcome when buying property, especially, if you live in California.

Since the 2017 Tubbs fires, Northern California has experienced a fair share of wildfires. We’ve all learned from existing building and landscape mistakes, that flammable fuels caused such loss.  The county has now set fire determent guidelines for homeowners to follow to “fire-harden” our properties, but too many existing insurance carriers ( AAA, State Farm, Farmers) have pulled out of California and are not  insuring or re-newing policies due to the “high fire” risk. And so the scramble for home insurance coverage is real.

This makes home insurance the highest monthly ticket item for homeowners.

 Of course, there is the CA Fair Plan, an alternative to traditional insurance, which was created (1968)  for homeowners who can’t get insurance due to “high-risk”factors like wildfires. It is not fair and absurdly costly.

Google says:

“The California FAIR Plan is a private, not-for-profit association that acts as the state’s insurer of last resort, offering basic property insurance (primarily fire) for homeowners and businesses unable to obtain coverage in the voluntary market. Created in 1968, it is not government-funded, but rather supported by all licensed insurance companies.”

(So all the companies share the risks equally and charge absurdly gross premiums and make a profit doing so..?) IMO

What’s this added cost going to do to the real estate market? Who can afford the insurance costs?

 I speak from personal experience as my own home in the Sonoma Valley for 35 years is now considered “high-risk” after the wildfires. I was cancelled by my insurance carrier AAA.

I began to panic. My own monthly insurance costs with the “CA Fair Plan” and a DIC wrap around policy would increase by 5 times! Crazy.

 I called around for insurance quotes. The quotes were very similar-all with wrap around policies(DIC) and the CA Fair Plan; neither affordable or fair, yet I was resigned to pay- what else could I do?

In the end, I did find coverage with a new carrier (Florida) coming into the CA insurance market, no CA Fair Plan. Crisis averted.

 This is where I’ve spent a lot of time with new buyer’s who are looking to buy in the Sonoma County, CA.

 Start getting yourself educated  about this…its deep and confusing, but the take-away is there is coverage for “high-risk property” but its just not affordable or sustainable. I think this may be one reason  the real estate market has stalled. No one can afford property insurance!

I do believe the “insurance vacuum” created by insurance companies leaving California will open up with new insurance carriers coming into the market in the future. There will be demand, and then supply…

 Do your research for affordable insurance before making an offer on a Sonoma County home. It should be the first question you ask your agent…Insurance?