You need insurance to get a mortgage and that's how 99% of home buyers likely buy... So, what happens now? Does the state stop subsidizing insurance policies and put that money into actual...
You need insurance to get a mortgage and that's how 99% of home buyers likely buy...
So, what happens now? Does the state stop subsidizing insurance policies and put that money into actual mitigation strategies to reduce the pyric debt in fire stricken areas, then after a number of years without a big flare up do the insurance agencies come back? Individual homeowners... Hell, even big corporate rental companies can't magically make Cali less fire prone by themselves.
Obviously, other companies can and will step in while jacking up their rates but at what point does land value freefall because even the big property companies can't get a policy anymore?
What'll probably happen is nothing, so people who down own homes in fire stricken areas will find it incredibly difficult to sell their properties, and new house building essentially halts in...
What'll probably happen is nothing, so people who down own homes in fire stricken areas will find it incredibly difficult to sell their properties, and new house building essentially halts in those areas. Eventually, those properties will be abandoned or burned down.
What could happen is that the state begins a program to buy these properties at some kind of market rate, and then demolish them. This occasionally happens in other disaster prone areas.
It's possible, but I wonder how many. Additionally, if I it is desirable to depopulate these dangerous areas, it might be best to buy out these properties and let them go vacant, rather than keep...
It's possible, but I wonder how many. Additionally, if I it is desirable to depopulate these dangerous areas, it might be best to buy out these properties and let them go vacant, rather than keep people in harms way and necessitate emergency responses.
From the article: ... ... ... Here is the State Farm's announcement.
From the article:
State Farm, California’s largest insurer, announced it will discontinue coverage for 72,000 homes and apartments starting this summer, a move likely to sharply inflate housing costs for affected residents in a state that’s reeling from a series of destructive recent wildfires.
The Illinois-based insurance giant, which accounts for a fifth of the California home insurance market and is the largest property and auto insurer in the U.S., cited rising costs, increasing catastrophe risk, and outdated regulations as reasons it won’t renew California policies for 30,000 homes and 42,000 apartments.
...
[The announcement] comes as the state’s elected insurance commissioner embarks on a yearlong overhaul of home insurance regulations aimed at calming California’s imploding market by giving insurers more latitude to raise premiums while extracting commitments from them to extend coverage in fire-risk areas.
...
The 42,000 commercial apartment non-renewals represent a complete withdrawal from California’s commercial apartment market, which covers property and liability insurance for apartment building owners. In July 2023, State Farm applied for an average 38.7% rate hike with the California Department of Insurance for commercial apartments, according to public filings. But the department ruled the hike was not supported by data, and instead approved a 23% hike at the beginning of March.
...
State Farm said non-renewals would roll out starting July 3 for home, business and rental dwelling policies and August 20 for commercial apartments.
Anyone know what kinds of properties these are? Are they all rural? Semi-rural? Suburban? I don't follow California wildfires too closely but I live in wildfire country in BC. There's been small...
Anyone know what kinds of properties these are? Are they all rural? Semi-rural? Suburban?
I don't follow California wildfires too closely but I live in wildfire country in BC. There's been small towns lost to wildfire here, but AFAIK most of the economic damage is actually to more urban or vacation areas because they have more significant property values and/or density while seemingly being affected at a roughly similar rate.
The thing about a wildfire is that it can happen so quickly if your community isn't taking precautions like removing encroaching greenbelt it sometimes doesn't matter how well resourced you are, there's going to be structural losses if you get an unlucky lightning strike in the right conditions.
It hasn’t happened yet. They’ve announced that they will start in July. In the announcement they say they will stop insuring apartments altogether, but haven’t given details about the other...
It hasn’t happened yet. They’ve announced that they will start in July. In the announcement they say they will stop insuring apartments altogether, but haven’t given details about the other cancellations.
Damage from wildfires was high in 2020, but the last two years were lowest they've been since the 90s. We keep having wet winters which correlates to less fire risk. What are the odds this is just...
Damage from wildfires was high in 2020, but the last two years were lowest they've been since the 90s. We keep having wet winters which correlates to less fire risk. What are the odds this is just an insurance company being greedy and trying to hold people hostage to have more control over which regulations they have to follow? I can see the CA state government allowing them to increase rates to an absurd level if they agree not to leave the state. But I am pretty cynical. Seems like if the law requires you to insure your home, the insurers should be required to insure. Homeowners don't have the choice to opt out.
The newspapers are reporting that they're losing money. I tried to figure out where they got it from. There's an organization called the NAIC ("National Association of Insurance Commissioners" -...
The newspapers are reporting that they're losing money.
I tried to figure out where they got it from. There's an organization called the NAIC ("National Association of Insurance Commissioners" - government, not industry) that has a bunch of publications. The "Profitability by Line by State" report is a free download and the most recent one was released in January 2023, but it covers up to 2021. California "underwriting profit" is on page 162.
Looking at the line for Fire, wow that's a big loss in 2018, which was when the Camp Fire burned down Paradise and caused PG&E to go bankrupt (again). On average it's about 10% underwriting profit, though.
I'd guess that the California state government gets more up-to-date numbers since it's a highly regulated industry?
The same thing has been happening with auto insurance. I'm in California, and it's been extremely difficult for me to get any type of auto insurance despite having just bought a car. Everywhere...
The same thing has been happening with auto insurance. I'm in California, and it's been extremely difficult for me to get any type of auto insurance despite having just bought a car. Everywhere has instituted a 14-20 day "copywriting review" that you have to wait for before your policy starts. Keep in mind a lot of these places require a VIN to start the review, so it's not like you can start the process before you buy a car. I've had to get temporary (read: shitty) insurance from my dealer to even drive off the lot because I simply could not start another policy in time. Even now, a month later and have to mail documents to Geico, I am not covered and my dealer policy is expiring soon. So I might not be able to drive for a week or two while this process continues.
Anyway, the reason? "Rising costs" on the part of insurers. I looked it up and apparently it is related to some new protections for California residents when it comes to insurance policies, which have made a lot of agencies want to limit the number of new California drivers they take on. Sorry to derail the thread which is about home insurance, but this has been something immensely frustrating for me.
Just offering a data point, I just got a renewal notice and my car insurance in Los Angeles is going from $337/mo to $476/mo, though my driving hasn’t changed since the pandemic. Shopped for...
Just offering a data point, I just got a renewal notice and my car insurance in Los Angeles is going from $337/mo to $476/mo, though my driving hasn’t changed since the pandemic. Shopped for quotes and they were all $500-600/mo. I’m glad I’m not in need of a new car anytime soon.
I just got a new car last year in California and everyone told me to stay away from AAA because they’re “too expensive”. Lo and behold, they were actually cheaper than anyone else who wanted to...
I just got a new car last year in California and everyone told me to stay away from AAA because they’re “too expensive”. Lo and behold, they were actually cheaper than anyone else who wanted to give me a quote.
I asked the guy who did my paperwork if he knew why and he said AAA actually did pretty well during the pandemic. However, most other auto insurance companies lost huge amounts and had to jack up their rates to compensate.
It kind of makes sense that a company which requires a membership fee is doing well for itself I guess, but it was interesting nonetheless. Definitely recommend them to anyone looking at a new car in California right now.
Wow that’s…insane. I can’t say I’m surprised rates went up, my insurance guy basically said they would and AAA wouldn’t stay competitive forever. But $800/mo is crazy, it’s about what I pay for...
Wow that’s…insane.
I can’t say I’m surprised rates went up, my insurance guy basically said they would and AAA wouldn’t stay competitive forever. But $800/mo is crazy, it’s about what I pay for car + insurance combined. Did you happen to ask why it was so much? Because if that’s really just the state of the market, it makes me a little fearful of having to renew this year…
I’m not sure about the insurance side of things, but AAA is actually a regional operation so I wouldn’t be too surprised to hear that things might be better or worse depending on exactly where you...
I’m not sure about the insurance side of things, but AAA is actually a regional operation so I wouldn’t be too surprised to hear that things might be better or worse depending on exactly where you live. Here in Southern California everyone I have asked about the topic loves them, but I wouldn’t be too surprised if things were different in Northern California. Whenever I shop around for insurance AAA is usually lower than anywhere else.
For comparison, my current and lowest quote is from Amica Mutual, and maybe a mutual insurance company is offering a better rate than others. Was quite shocked at how bad AAA came back with...
For comparison, my current and lowest quote is from Amica Mutual, and maybe a mutual insurance company is offering a better rate than others. Was quite shocked at how bad AAA came back with though. More details in sibling reply (to teaearlgraycold’s comment).
What kind of car are you driving and what kind of coverage are these quotes for? Without that information I can't really be sure if the cost is surprising. And to be clear - this is for one car?
What kind of car are you driving and what kind of coverage are these quotes for? Without that information I can't really be sure if the cost is surprising. And to be clear - this is for one car?
One car, 3 year old Tesla Model S (note: high repair costs, but I got it at its cheapest price of $69,420 because Elon is immature, so it’s not like the stupid expensive 6-figure ones), no...
One car, 3 year old Tesla Model S (note: high repair costs, but I got it at its cheapest price of $69,420 because Elon is immature, so it’s not like the stupid expensive 6-figure ones), no incidents, good driver discount, 10k yearly mileage.
Current and cheapest insurance is through Amica Mutual, 100/300/100k, $1000 collision and comprehensive deductibles.
I’m mainly surprised by the increase, and the vast spread in quotes I’ve gotten.
I love my AAA insurance. I've had them since college (2 cars ago/10 years ago) and they've been nothing but perfect. My premiums haven't gone up because I needed to make a claim (a rock cracked my...
I love my AAA insurance. I've had them since college (2 cars ago/10 years ago) and they've been nothing but perfect. My premiums haven't gone up because I needed to make a claim (a rock cracked my windshield in the last car), and it only went up about $50/month when I added a second car to our policy. They also take into account how many miles you drive annually, and we only drive about 2000 miles on one car and about 300 on the other. We also have our renter's policy with them. I would have my dog's insurance through them if they had a pet policy, but our annual insurance for renter's with them is only $135, and it's been that cost for the last 4 years with increasing protections because I update the value of our policy every year at renewal.
all in all, I think I pay $550 for two cars and renter's insurance every other month.
Huh. Near SF I'm paying... $98/month for Geico on my 2016 Volt. Granted I have high deductibles for my own car's repair. I'm much more worried about the liability from hitting some post IPO...
Huh. Near SF I'm paying... $98/month for Geico on my 2016 Volt. Granted I have high deductibles for my own car's repair. I'm much more worried about the liability from hitting some post IPO employee's lambo than I am about the cost to fix or replace my car. Damaging someone else's property has a higher price ceiling than fixing my own.
I wouldn't really say it's the same thing, though. A more similar situation with car insurance would be insurer's reluctance to insure cars by Kia, especially ones between 2011 and 2021. In that...
I wouldn't really say it's the same thing, though. A more similar situation with car insurance would be insurer's reluctance to insure cars by Kia, especially ones between 2011 and 2021. In that case, the "fire" is that people really like trying to steal Kias, which, like being prone to wildfires, made those cars prone to being destroyed.
For the situation in California in general, it's more the classic result of trying to fix prices by setting price ceilings - you get shortages instead.
Who are you using for car insurance? I need to change from FL insurance. I have Progressive and they're fine. Just wondering if there are cheaper/better options.
Who are you using for car insurance? I need to change from FL insurance. I have Progressive and they're fine. Just wondering if there are cheaper/better options.
The best quote I got was from Geico, which was around $150 a month for 100/300/100 coverage, 100k uninsured motorist, and comprehensive and collision with $500 deductibles. I've started the...
The best quote I got was from Geico, which was around $150 a month for 100/300/100 coverage, 100k uninsured motorist, and comprehensive and collision with $500 deductibles. I've started the process of getting insured by them, but they have a "underwriting review" which requested additional documents and has been taking ages. I'm still not insured by them and it is currently unclear whether my application is still being processed by them. But they're the best quote I got.
Second was State Farm, who for the same coverage quoted me at $230/mo, and have a similar underwriting review, but seemingly much better costumer service so far. I've never actually be in touch with a human at Geico, whereas for State Farm I've been in touch with my local agent. I also have a firm date when I should have coverage from them unless something gets flagged in the review.
For further context, I have a good driving record, I am the only insured driver, and one vehicle. Hope that helps, I found it very difficult to find information about what rates were fair and standard when I started the process.
This is great! Thank you so much. I moved back from FL so I know I'll need different coverage and the price will change, but I also don't know what's fair. This really helps.
This is great! Thank you so much. I moved back from FL so I know I'll need different coverage and the price will change, but I also don't know what's fair. This really helps.
You need insurance to get a mortgage and that's how 99% of home buyers likely buy...
So, what happens now? Does the state stop subsidizing insurance policies and put that money into actual mitigation strategies to reduce the pyric debt in fire stricken areas, then after a number of years without a big flare up do the insurance agencies come back? Individual homeowners... Hell, even big corporate rental companies can't magically make Cali less fire prone by themselves.
Obviously, other companies can and will step in while jacking up their rates but at what point does land value freefall because even the big property companies can't get a policy anymore?
What'll probably happen is nothing, so people who down own homes in fire stricken areas will find it incredibly difficult to sell their properties, and new house building essentially halts in those areas. Eventually, those properties will be abandoned or burned down.
What could happen is that the state begins a program to buy these properties at some kind of market rate, and then demolish them. This occasionally happens in other disaster prone areas.
Wouldn't there be buyers who can pay cash for a much cheaper house? My guess is that the market would find a new, lower, equilibrium.
It's possible, but I wonder how many. Additionally, if I it is desirable to depopulate these dangerous areas, it might be best to buy out these properties and let them go vacant, rather than keep people in harms way and necessitate emergency responses.
From the article:
...
...
...
Here is the State Farm's announcement.
Anyone know what kinds of properties these are? Are they all rural? Semi-rural? Suburban?
I don't follow California wildfires too closely but I live in wildfire country in BC. There's been small towns lost to wildfire here, but AFAIK most of the economic damage is actually to more urban or vacation areas because they have more significant property values and/or density while seemingly being affected at a roughly similar rate.
The thing about a wildfire is that it can happen so quickly if your community isn't taking precautions like removing encroaching greenbelt it sometimes doesn't matter how well resourced you are, there's going to be structural losses if you get an unlucky lightning strike in the right conditions.
It hasn’t happened yet. They’ve announced that they will start in July. In the announcement they say they will stop insuring apartments altogether, but haven’t given details about the other cancellations.
Damage from wildfires was high in 2020, but the last two years were lowest they've been since the 90s. We keep having wet winters which correlates to less fire risk. What are the odds this is just an insurance company being greedy and trying to hold people hostage to have more control over which regulations they have to follow? I can see the CA state government allowing them to increase rates to an absurd level if they agree not to leave the state. But I am pretty cynical. Seems like if the law requires you to insure your home, the insurers should be required to insure. Homeowners don't have the choice to opt out.
The newspapers are reporting that they're losing money.
I tried to figure out where they got it from. There's an organization called the NAIC ("National Association of Insurance Commissioners" - government, not industry) that has a bunch of publications. The "Profitability by Line by State" report is a free download and the most recent one was released in January 2023, but it covers up to 2021. California "underwriting profit" is on page 162.
Looking at the line for Fire, wow that's a big loss in 2018, which was when the Camp Fire burned down Paradise and caused PG&E to go bankrupt (again). On average it's about 10% underwriting profit, though.
I'd guess that the California state government gets more up-to-date numbers since it's a highly regulated industry?
The same thing has been happening with auto insurance. I'm in California, and it's been extremely difficult for me to get any type of auto insurance despite having just bought a car. Everywhere has instituted a 14-20 day "copywriting review" that you have to wait for before your policy starts. Keep in mind a lot of these places require a VIN to start the review, so it's not like you can start the process before you buy a car. I've had to get temporary (read: shitty) insurance from my dealer to even drive off the lot because I simply could not start another policy in time. Even now, a month later and have to mail documents to Geico, I am not covered and my dealer policy is expiring soon. So I might not be able to drive for a week or two while this process continues.
Anyway, the reason? "Rising costs" on the part of insurers. I looked it up and apparently it is related to some new protections for California residents when it comes to insurance policies, which have made a lot of agencies want to limit the number of new California drivers they take on. Sorry to derail the thread which is about home insurance, but this has been something immensely frustrating for me.
Just offering a data point, I just got a renewal notice and my car insurance in Los Angeles is going from $337/mo to $476/mo, though my driving hasn’t changed since the pandemic. Shopped for quotes and they were all $500-600/mo. I’m glad I’m not in need of a new car anytime soon.
I just got a new car last year in California and everyone told me to stay away from AAA because they’re “too expensive”. Lo and behold, they were actually cheaper than anyone else who wanted to give me a quote.
I asked the guy who did my paperwork if he knew why and he said AAA actually did pretty well during the pandemic. However, most other auto insurance companies lost huge amounts and had to jack up their rates to compensate.
It kind of makes sense that a company which requires a membership fee is doing well for itself I guess, but it was interesting nonetheless. Definitely recommend them to anyone looking at a new car in California right now.
Thank you for the recommendation, but AAA just quoted me $776 a month, $300 more than my current provider. As a member.
Wow that’s…insane.
I can’t say I’m surprised rates went up, my insurance guy basically said they would and AAA wouldn’t stay competitive forever. But $800/mo is crazy, it’s about what I pay for car + insurance combined. Did you happen to ask why it was so much? Because if that’s really just the state of the market, it makes me a little fearful of having to renew this year…
I’m not sure about the insurance side of things, but AAA is actually a regional operation so I wouldn’t be too surprised to hear that things might be better or worse depending on exactly where you live. Here in Southern California everyone I have asked about the topic loves them, but I wouldn’t be too surprised if things were different in Northern California. Whenever I shop around for insurance AAA is usually lower than anywhere else.
I'm in the Bay Area, and AAA was the lowest cost, and most comprehensive insurance around.
For comparison, my current and lowest quote is from Amica Mutual, and maybe a mutual insurance company is offering a better rate than others. Was quite shocked at how bad AAA came back with though. More details in sibling reply (to teaearlgraycold’s comment).
What kind of car are you driving and what kind of coverage are these quotes for? Without that information I can't really be sure if the cost is surprising. And to be clear - this is for one car?
One car, 3 year old Tesla Model S (note: high repair costs, but I got it at its cheapest price of $69,420 because Elon is immature, so it’s not like the stupid expensive 6-figure ones), no incidents, good driver discount, 10k yearly mileage.
Current and cheapest insurance is through Amica Mutual, 100/300/100k, $1000 collision and comprehensive deductibles.
I’m mainly surprised by the increase, and the vast spread in quotes I’ve gotten.
I love my AAA insurance. I've had them since college (2 cars ago/10 years ago) and they've been nothing but perfect. My premiums haven't gone up because I needed to make a claim (a rock cracked my windshield in the last car), and it only went up about $50/month when I added a second car to our policy. They also take into account how many miles you drive annually, and we only drive about 2000 miles on one car and about 300 on the other. We also have our renter's policy with them. I would have my dog's insurance through them if they had a pet policy, but our annual insurance for renter's with them is only $135, and it's been that cost for the last 4 years with increasing protections because I update the value of our policy every year at renewal.
all in all, I think I pay $550 for two cars and renter's insurance every other month.
Huh. Near SF I'm paying... $98/month for Geico on my 2016 Volt. Granted I have high deductibles for my own car's repair. I'm much more worried about the liability from hitting some post IPO employee's lambo than I am about the cost to fix or replace my car. Damaging someone else's property has a higher price ceiling than fixing my own.
I wouldn't really say it's the same thing, though. A more similar situation with car insurance would be insurer's reluctance to insure cars by Kia, especially ones between 2011 and 2021. In that case, the "fire" is that people really like trying to steal Kias, which, like being prone to wildfires, made those cars prone to being destroyed.
For the situation in California in general, it's more the classic result of trying to fix prices by setting price ceilings - you get shortages instead.
Who are you using for car insurance? I need to change from FL insurance. I have Progressive and they're fine. Just wondering if there are cheaper/better options.
The best quote I got was from Geico, which was around $150 a month for 100/300/100 coverage, 100k uninsured motorist, and comprehensive and collision with $500 deductibles. I've started the process of getting insured by them, but they have a "underwriting review" which requested additional documents and has been taking ages. I'm still not insured by them and it is currently unclear whether my application is still being processed by them. But they're the best quote I got.
Second was State Farm, who for the same coverage quoted me at $230/mo, and have a similar underwriting review, but seemingly much better costumer service so far. I've never actually be in touch with a human at Geico, whereas for State Farm I've been in touch with my local agent. I also have a firm date when I should have coverage from them unless something gets flagged in the review.
For further context, I have a good driving record, I am the only insured driver, and one vehicle. Hope that helps, I found it very difficult to find information about what rates were fair and standard when I started the process.
This is great! Thank you so much. I moved back from FL so I know I'll need different coverage and the price will change, but I also don't know what's fair. This really helps.