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  • Writer's pictureNancy Bennett

Insurance Crisis Is Affecting Consumers and the Housing Market

Insurance has been a glaring mess in California, and it’s really starting to affect the housing market. Today, I want to share some things I’m hearing from the real estate community after asking for feedback on my social channels about home and fire insurance. The goal is to give some perspective and advice to sellers and buyers. This isn’t meant to be negative or sensational either. Let’s talk about the market that actually exists.

Homebuyers who are getting approved for a new loan are finding that their purchase power (price they can afford to offer on a home) is becoming less and less as the costs of home insurance are increasing this year. For new homebuyers, it is imperative to get an updated home insurance quote the MINUTE you get a contract on a new home. Waiting until your contingency period (time you must complete all due diligence) is about to expire is not what you want to be doing right now.

If you can imagine that you’ve made an offer on a home that was accepted by the seller, you’ve completed inspections, had your appraisal done and then after 10 days, you begin shopping for homeowner’s insurance, only to learn that the policy is 3 times the cost of what you were expecting. YIKES!  

I’ve heard that some buyers have to cancel because the total cost of home ownership is too much for their budget. I heard recently that one family received three quotes ranging from $1,100 to $2,600 a year. I recently heard from my insurance company and the good news is that I’m not getting dropped, but the bad news is that my new policy with be almost 3 times higher. 


What do you imagine the costs may be in 2 or 3 years? Principal, interest, taxes, insurance and even HOA dues pushes your debt-to-income ratios too high. 

I’ve had a number of my neighbors and clients call and ask if I can provide any guidance or referrals for homeowner’s insurance companies because they received a letter stating their rates have tripled or they are getting DROPPED by their long-time insurance company. It’s awful!

Other clients are afraid to file claims because they don’t want to be dropped.

And other friends are getting letters from their insurance companies stating that their roof has missing shingles and moss growing on it, so they are cancelling their policy.

YEAH. Insurance companies are flying over your home to check out your roof and property!

Investors’ or landlords’ costs are increasing also – cost of repairs (time and materials), water and, of course, insurance. These costs are typically passed on to tenants through rent increases when their lease is due for renewal. Can you imagine if you have a tenant in your home and an insurance company flies over your property and notices compliance issues, certain dog breeds present or roof, dry rot, or falling fences? Tenants like this may potentially get you canceled!

What can you do?

  1. Get your roof inspected ASAP. Call or email me for some referrals.

  2. Get a chimney inspection. Maybe your chimney cap blew off this past winter.

  3. Check fences, pool (fences or covers, too).

  4. Clean up debris that you may have on the side of your home (potential fire hazard?).

  5. Consider if you want to file a claim or pay out of pocket. I know this is awful, but this is today’s reality.

  6. Did you receive notice that you’re being dropped? Check out the California Fair Plan site today to get a new quote.

It sounds more and more like Big Brother is watching and certainly looking for reasons to cancel or increase your insurance premiums. In sharing stories like this, I try not to freak you out, but provide insight on how you can avoid getting canceled and if you do, who to call for other quotes.

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