CA Fair Plan- thoughts and experiences?

[bluegixxer600]

I'm currently with State Farm and am paying though the nose for my homeowner's policy after a nearly 100% increase last November. I started shopping around and a reputable broker found me a policy for the home along with moving to the Fair Plan for the fire portion. It will be nearly half of what I am currently paying though State Farm. My wallet says go for it, but I have come concerns. Is the Fair Plan luring me in with a low rate and going to slam me with a huge increase soon? I have read that the Fair Plan is going to be bankrupted by the recent fires, more money has to come from somewhere. I have also read mixed opinions on dealing with the Fair Plan, even things as simple as being able to contact them with a question. I also know State Farm can bail any day. My zip code made it though the last round of cancellations they did last fall. I'm in Nevada County, but in one of the lowest risk areas. I have about 7 years left on my mortgage. Thanks in advance for advice/opinions!

 

[mercurial]

To a large extent, insurance is insurance. It's just a contract that is reinforced by California's very sturdy insurance regulations and laws. Yes, a more cut-rate insurance company is going to have skeletal support staff. But that can also often mean that when you call State Farm, they tell you to fuck off in 5 minutes, whereas the FAIR plan will take 20 minutes to tell you the same.

My point being, home insurance companies are always quick to take your money and tight about paying it back. As far as rate increases go, I think you may be screwed. Nevada county in general appears to be very high risk, I can't imagine things will get any better in coming years.

 

[GAJ]

We were paying about two grand with State Farm for very high coverage levels which will not be renewed starting May 15th.

My expectation of Fair Plan plus State Farm, (I looked at other options with local broker but the conditions were insane), will be ad least five grand.

 

[Grissom]

I don't know how much you are currently paying State Farm but I can tell you my experience

We own a 2nd home (about 1100 sq ft) in a neighboring county and our insurance was less than $1000 total w/ AAA. About 5 or 6 yrs ago we were non renewed and had to go on the Fair Plan, initially my total insurance costs more than doubled (Fair Plan and Homeowners) and the Fair Plan has increased every year.

I don't have every year with me but I did get my Fair Plan renewal offer for 25' to 26' just recently

23' to 24' = $3365

24' to 25' = $4452 (almost $1100 increase from the prior year)

25' to 26' = $4551 ($99 increase)

 

[mrmarklin]

I know a lot of people in real estate, and I'm surprised your FAIR plan is cheaper than you can get otherwise. I don't know of one person who has had to deal with the plan say it is cheaper.
I just got my bill here in Burney, and it is over $3.3k for what is just a regular home. I have Farmers Insurance and the fire hydrant is in my front yard. We're on city water and utilities.

At some level, I feel lucky that I have any insurance at all.

 

[Sharxfan]

I hate to say it but you guys are late to the party. We don't have fires here in the swamplands but due to flooding and hurricanes hitting areas pretty bad the last few years my insurance tripled and I have had one storm related claim in 19 years and that finally happened because my roof was 15 years old and a ton of shingles blew off. It was replaced and don't foresee any more issues for another 20 years as we got an even better roof but now I pay for all the peoples homes who were destroyed in surrounding areas. About 3 years ago we also went through the great leaving as all the low cost insurers lost their asses. State Farm is quick to pull out as soon as they have to pay and their commercials recently about being there make me want to chuck something at the TV as they are there to take your money but as soon as it comes to paying you back for all those years of giving them money they say Focker Out and head out for easier insurance territories. Sorry its happening to you guys now as well.

 

[mercurial]

Alot of the country has sky high home insurance rates because hail creates a few dents in the roof and then the homeowner scams a new roof out of the incident. Pretty soon the cost of roofs is just built into the annual premium

Probably works out great for the roofing companies.

 

[Killroy1999]

Alot of the country has sky high home insurance rates because hail creates a few dents in the roof and then the homeowner scams a new roof out of the incident. Pretty soon the cost of roofs is just built into the annual premium

Probably works out great for the roofing companies.

I have had a number of roofs replaced by insurance from hail damage in Texas.

The insurance circle the damaged shingles with white calk and if they count enough damage, the total the roof without any fuss. The roof is depreciated, so its not like it's a free roof.

 

[bluegixxer600]

State Farm is currently charging me $6900 a year. 5 years ago I was paying $1250 a year. My house is nothing fancy either. Ranch style 4/3 about 1800 sq ft. In an established subdivision with fire hydrants and a 24/7 staffed fire station less than 5 min away.

 

[Sharxfan]

I believe my premium is now ~$10K a year up from around ~$1200/yr and it increments up each year.

 

[flips21]

I have two properties with FAIR plan and a DIC with AAA coverage. ("DIC" stands for "difference in coverage"). My experience is that a lot of insurers are charging way too much for the DIC. Safeco, Farmers, Allied, State Farm all quoted me what my insurance used to cost with fire for the DIC. Given that they didn't have any exposure to fire or vandalism damage, it felt like a ripoff. AAA is charging me 1/2 of what the others quoted for the DIC. It doesn't matter who you get the FAIR plan from if you control the coverage amounts in the quote, (which you should). Don't let the agent give you a bum quote that fits the agent's needs and not yours. I recommend you get a quote from AAA for both the DIC and FAIR.

My experience with FAIR was after a few years at Tahoe with the surplus market quotes (surplus market players sell insurance that doesn't meet California's pricing guidelines and are almost always higher than allowed in market) that kept going up and way past what FAIR charges. I went to FAIR after my last surplus policy congratulated me on my renewed with a 30% deductable added to the fire coverage noted at the end of the renewal letter. The numbers you quoted sound like you have a surplus policy sold through the Farmer's office. Who is listed on the policy as the insurance company? Farmers or someone else?

Another reason to go with the FAIR plan is because it can't go insolvent. All the companies doing homeowner's insurance per the state's rules are on the hook for part of the cost of the FAIR plan's payouts after reinsurance runs out. After the participants pay the FAIR plan for their share, all policy holders in the state will pay a surcharge to cover the FAIR plan. A surplus market insurer doesn't have access to pockets like that. So you could pay more for much better service, but you do it at the rist that they didn't get enough reinsurance to cover a disaster. Not a great set of options.

Nobody likes working with the FAIR plan as they no longer deal directly with customers. You have to work through your agent who will be frustrated by FAIR's backlog creating delays in responses. This was caused by the landslide of non-renewed customers looking for coverage before their mortgage companies start billing them for insurance. It isn't FAIR's fault or your agents fault. The industry is in crisis and there is a mass exodus to the FAIR plan as State Farm stopped writing policies and others are non-renewing at a record rate.

Not to get to political, but we need a smarter insurance commissioner. The commissioner's office is an impediment to stabilizing the market.

Flip

 

[mercurial]

I have had a number of roofs replaced by insurance from hail damage in Texas.

The insurance circle the damaged shingles with white calk and if they count enough damage, the total the roof without any fuss. The roof is depreciated, so its not like it's a free roof.

Yea maybe using the word "scam" is a bit too strong. But the general point remains, often the hail damage is cosmetic or easily fixed with spot shingle replacements. But due to the particular liability dynamics of it, the whole roof just ends up getting replaced. Which is all well and fine, but if roofs are getting replaced every 10 years that could have a service life of 20 years, and those early replacements are being paid by insurers, the additional cost is just going to get spread to everyone through much higher premium.

 

[mercurial]

Nobody likes working with the FAIR plan as they no longer deal directly with customers. You have to work through your agent who will be frustrated by FAIR's backlog creating delays in responses. This was caused by the landslide of non-renewed customers looking for coverage before their mortgage companies start billing them for insurance. It isn't FAIR's fault or your agents fault. The industry is in crisis and there is a mass exodus to the FAIR plan as State Farm stopped writing policies and others are non-renewing at a record rate.

Not to get to political, but we need a smarter insurance commissioner. The commissioner's office is an impediment to stabilizing the market.

Flip

What would you propose? The structure of the FAIR plan is already a subsidy of riskier hill country policy holders, by less risky urban area policy holders. Should it go even further?

BTW, I think the DIC is mostly to cover water damage? They make really sophisticated whole house water shut off valves now to minimize that kind of damage. Might be worth investing in that and ditching the DIC.

 

[GAJ]

What would you propose? The structure of the FAIR plan is already a subsidy of riskier hill country policy holders, by less risky urban area policy holders. Should it go even further?

BTW, I think the DIC is mostly to cover water damage? They make really sophisticated whole house water shut off valves now to minimize that kind of damage. Might be worth investing in that and ditching the DIC.

I will have to DIC policy in order to keep earthquake and umbrella.

 

[Grissom]

What would you propose? The structure of the FAIR plan is already a subsidy of riskier hill country policy holders, by less risky urban area policy holders. Should it go even further?

BTW, I think the DIC is mostly to cover water damage? They make really sophisticated whole house water shut off valves now to minimize that kind of damage. Might be worth investing in that and ditching the DIC.

Difference in Conditions (DIC) policies provide coverages that are not available through the FAIR Plan, such as water damage, theft and liability coverage. They are designed to combine with the FAIR Plan policy to provide you with coverage similar to that in a comprehensive homeowner’s policy. The FAIR Plan does not offer DIC policies.

 

[flips21]

What would you propose? The structure of the FAIR plan is already a subsidy of riskier hill country policy holders, by less risky urban area policy holders. Should it go even further?

BTW, I think the DIC is mostly to cover water damage? They make really sophisticated whole house water shut off valves now to minimize that kind of damage. Might be worth investing in that and ditching the DIC.

I would propose that the insurance companies be allowed to charge an amount that allows them to make a reasonable profit. I don't think the FAIR plan is the best option, but it is essentially the only option available since the rules in the California market don't make insuring someone like myself viable. State Farm stopped writing any policies in California, not just for those in higher risk areas. It seems reasonable to question the rules for writing insurance in the state when you have companies like State Farm abandoning it.

My primary home is not in a forest or surrounded by trees. It is in a subdivision surrounded by grass covered hills with Oaks. But it is in an area mapped by Cal Fire that puts it at a higher risk that an urban property. Because the rules are made to limit insurance costs for urban dwellers, there is no business savy pathway for a name brand insurance company to offer me a quote. It may have changed at the first of this year, but previously, insurance companies were not allowed to pass on the cost of reinsurance. How is an insurance company going to write policies that need greater reinsurance when they can't include that cost in their quotes? The rules create a gap for a substantial percentage of the state leaving just the FAIR plan, a plan created for the residents of Watts after the LA riots.

Open up the market for people in my situation where name brand insurers can compete. Will it cost me more than an urban dweller? Sure it will. But right now, the state has blocked all competitive options and put me into a box that was created for the residents of Watts after the Watts riots. Not a great fit.

Regarding your DIC question: FAIR covers fire and vandalism. What remains is most of the reason to have homeowner's insurance. I have a water monitoring and shut off device installed on my house but I doubt I would ever make a claim on water damage. That is something I would fix myself. DIC Liability is my primary reason I carry insurance. The rest of it is required by the mortgage company.

Flip

 

[WFO]

We had Farmers homeowner's insurance for more than thirty years. We never made a claim. The insurance agents we had were worthless worms. Two years after the CZU fire, they dropped our fire insurance and told us we had to go on the California Fair Plan. They wanted Nine Grand for it. We balked and found a better deal with State Farm. That lasted until last year. Yep, they wouldn't renew or fire insurance. So now, on top of my homeowner's insurance with State Farm, we're stuck with the California Fair Plan. The premium was close to Twenty-two Grand for the year. It's becoming untenable.

Fuck me.

I wonder what's gonna happen after the insurance companies shell out all the payments for the fires in LA County?

 

[mercurial]

Open up the market for people in my situation where name brand insurers can compete. Will it cost me more than an urban dweller? Sure it will. But right now, the state has blocked all competitive options and put me into a box that was created for the residents of Watts after the Watts rights. Not a great fit.

Do you have good reason to believe that a reduction in regulation will actually result in more affordable insurance options for you?

It's my understanding that one of the proposals that State regulators were considering, was relaxing pricing limitations (allowing them to be forward looking instead of just backward) in exchange for insurers guaranteeing that they will issue X% of policies in high risk areas.

That smells a lot like policy that will result in urban policy holders subsidizing rural ones. It also seems to reflect a concern that even if underwriting rules were relaxed, insurers will still try to avoid issuing policies to high risk areas.

 

[bluegixxer600]

Thanks everyone for the replies, lots of good info. I’ll check my current policy to see if it has a surplus policy on it.

 

[littlebeast]

we have FAIR for . it’s just under $9,000. know people who pay less, but also know a lot who pay several thousand more similar square feet. haven’t had any issues communicating with them - do it all through our broker. everything that needs to happen, happens. and they’ve never complained about any issues, or deferred pending response.

according to our local gov rep, they’re working on fixing the system. am not holding my breath.

do feel like a dumbass though. have had some major roof damage from wood coming down on it. have always just paid the bill. never crossed my mind to make a claim. suppose i would have, if i’d thought about, but i didn’t.