CALIFORNIA FAIR PLAN - HOW FAIR IS IT? 29% INCREASE!

With any headline it’s about reading the whole story.
On average rate payers that have their homeowners FIRE insurance through the California Fair Plan will see a 29% increase in rates on October 15th or after depending on when their policy went into place.
Home page - The California FAIR Plan
How does this fall into place and who’s paying more and who’s paying less?
High risk foothills and mountain areas are going to see a rise in rates of 30% - 50%. Some areas could exceed 100%.. But about a quarter of policy holders will see their rates drop, some drastically, especially in low-risk urban settings and the Central Valley area.

In risk areas, there are options to follow the home hardening and fire mitigation guidelines that decrease your risk. You can always contact your local insurance agent to get more specific details about your policy and possible changes that can impact you.

When selling or buying a home, insurance has now become a “contingency”. For the first 22-23 years of my career, it was a non-issue. We just penciled in $1,000 as the line item for insurance costs. That is definitely not the case now for sellers, via a Natural Hazards Disclosure report you’re required to provide to a Buyer. In that report it lets you and the buyer know which risk level your home is located in. For buyers, if you have a specific area/neighborhood you’re looking in, you can contact your insurance agent to get an idea if it’s a low or high area. Why? Because it may impact your affordability of a home. In a recent home sale in Half Moon Bay where I was representing the seller the insurance costs went from $100 a month to $600 a month for the new owner. That takes a big bite out of what can go to your mortgage and taxes. So, doing this homework before you even go out and start looking at homes is important. It’s better to know ahead of time when finding that “perfect place” only to find out that insurance costs are going to thwart the deal.

Please don’t assume because of a lack of trees or vegetation that it’s a low-risk area.
If the home is in a high/very high-risk area, the Seller is required to get an inspection from Cal-Fire. They will assess the individual property and let you know what needs to be cleaned up in order to make you and your home safer from fire risk. The staff is based in Santa Cruz County and normally come to San Mateo County on Wednesdays for inspections. Plan ahead and get this done early in the process. Do not wait until the last minute.

As always, feel free to reach out with questions.