Insurance

Your Real Estate Expert for Berkeley and Beyond

  • Deep Market Knowledge
  • Analytical, Strategic, Creative
  • Honest, Adept, Direct

“Marilyn is exceptional. Her knowledge base, enthusiasm for her job, professional ethics, organization, sensitivity to our aesthetic requirements, loyalty and gentle perseverance set her apart.”

-- Bill and Carol Seidel

Marilyn Garcia, PhD

Marilyn Garcia, PhD Broker Associate, Realtor® CA DRE LICENSE #01355514

The Grubb Company 1656 Shattuck Avenue Berkeley, CA 94709

Direct: (510) 390-5406

REAL ESTATE ANSWERS: What’s going on in the home insurance market, and how does it affect current homeowners?

What’s going on in the home insurance market, and how does it affect current homeowners? In late May, State Farm, which is the largest issuer of homeowners’ policies in California, announced that it would not sell any new home insurance policies in California. In addition, Farmer's Insurance just announced that they will limit the number of new policies they sell here. Allstate also stopped issuing new policies in California last fall, so this is a significant trend. Why are these big insurers pulling away from California at this time? Major wildfires in recent years have resulted in surges in claims, [...]

By |July 7th, 2023|Buyers, General Interest, Insurance, Real Estate Trends, Sellers|

ARE YOU UNDER-INSURED?

ARE YOU UNDER-INSURED? The huge wildfires this year are a reminder that we should all periodically evaluate our insurance coverage, and make sure that we could rebuild if we ever needed to.  Most insurance policies auto-renew each year, and the coverage may not keep pace with rising building costs. To get a very rough sense of the adequacy of your existing coverage, take your total coverage amount and divide it by the square footage of your home to calculate how much you would be able to spend per square foot if you had to rebuild.  Experts say that $250-$300 per [...]

By |September 22nd, 2020|Berkeley, Data, General Interest, Insurance, Resources|

REAL ESTATE ANSWERS: How have the massive fires in recent years affected homeowner’s insurance locally?

How have the massive fires in recent years affected homeowner’s insurance locally? I spoke with Ruth Stroup with Farmers Insurance, who is always a great source of information about the insurance world, and asked her what changes she’s seen as a result of the tragic fires we’ve had in California over the last few years. Ruth said that the huge claims in back-to-back years from the fires have affected insurance companies’ ability to get reinsurance. (Reinsurance pays a share of the claims in the case of massive losses like with the fires, and is a critical component of the insurance [...]

By |July 2nd, 2019|Berkeley, General Interest|

REAL ESTATE ANSWERS: What’s going on in the home insurance market, and how does it affect current homeowners?

What’s going on in the home insurance market, and how does it affect current homeowners?

In late May, State Farm, which is the largest issuer of homeowners’ policies in California, announced that it would not sell any new home insurance policies in California. In addition, Farmer’s Insurance just announced that they will limit the number of new policies they sell here. Allstate also stopped issuing new policies in California last fall, so this is a significant trend.

Why are these big insurers pulling away from California at this time? Major wildfires in recent years have resulted in surges in claims, and climate change has made this much more likely to be the norm in coming years. Pandemic supply-chain issues and lingering inflation have meant that the cost of settling claims has gone up significantly. The cost of reinsurance, which is insurance that the companies get to protect themselves against excessive losses, has also gotten more expensive. The California Department of Insurance, though, limits companies’ ability to raise rates to cover higher costs and elevated risks, leading State Farm and Allstate to decide that it’s not worth selling new policies here.

Happily, this does not mean that existing State Farm and Allstate customers are losing their coverage. It does mean, though, that anyone looking for a new policy right now is going to find it more challenging, and more expensive. There are still lots of insurers selling policies in California, but there are fewer choices now. The remaining insurers are seeing increased demand for their products, which in theory would lead to higher prices. With pricing controlled by the California Department of Insurance, though, what we get are insurance companies that are much more selective in which properties they choose to insure.

This is not a good time to shop for a new or replacement homeowner’s insurance policy, so it’s also not a good time to do anything to give your existing insurer a reason to cancel. Be extra sure right now that the insurance bill is paid on time. If your insurance is paid by an outside party (such as a lender who collects money for taxes and insurance through an impound account, and makes those payments for you), it’s worth the effort to confirm that the payments are made on time, especially if your loan has been recently transferred to a new bank or servicer.  If you are shopping for a new home, when you see one you like, you should plan to check insurability and get coverage quotes very early in the process.

Insurance companies are paying much more attention to the condition of the homes they insure, including their roofs as well as their plumbing and electrical systems. Many companies will not issue a new policy for a home that has older electrical (such as knob and tube wiring, or fuses instead of circuit breakers). If you are planning to sell your home, it’s worth seriously considering work that will make the home more insurable, such as replacing a wood shake roof or knob and tube wiring. Your current insurance policy will (sadly) not be transferrable to the new owners, and buyers need to be able to get insurance to get a loan.

ARE YOU UNDER-INSURED?

ARE YOU UNDER-INSURED?

The huge wildfires this year are a reminder that we should all periodically evaluate our insurance coverage, and make sure that we could rebuild if we ever needed to.  Most insurance policies auto-renew each year, and the coverage may not keep pace with rising building costs.

To get a very rough sense of the adequacy of your existing coverage, take your total coverage amount and divide it by the square footage of your home to calculate how much you would be able to spend per square foot if you had to rebuild.  Experts say that $250-$300 per square foot is the minimum likely cost to rebuild in our area, so I would want to have at least that much coverage.

Also check to be sure that you’ve updated your policy to reflect improvements you’ve made to your home, and that you have coverage for any external structures.

Now, while we’re staying home, is also a good time to do a home inventory, which helps a great deal if you ever have to file a claim for a major loss.  You can find forms online to fill out where you list the contents of your home, or you can take photos or video of your rooms, closets and other storage areas, showing the contents.  Keep a copy of the information away from your home (ideally somewhere online), so you can get it if you ever need it.  (Let’s hope we never need it!)

 

For more information on doing a home inventory, see

https://www.iii.org/article/how-create-home-inventory

Here’s also one example of a spreadsheet for doing a home inventory:

https://www.nycm.com/pdf/HomeContentsInventoryWorksheet.pdf

 

By |September 22nd, 2020|Categories: Berkeley, Data, General Interest, Insurance, Resources|Tags: , , |

REAL ESTATE ANSWERS: How have the massive fires in recent years affected homeowner’s insurance locally?

How have the massive fires in recent years affected homeowner’s insurance locally?

I spoke with Ruth Stroup with Farmers Insurance, who is always a great source of information about the insurance world, and asked her what changes she’s seen as a result of the tragic fires we’ve had in California over the last few years.

Ruth said that the huge claims in back-to-back years from the fires have affected insurance companies’ ability to get reinsurance. (Reinsurance pays a share of the claims in the case of massive losses like with the fires, and is a critical component of the insurance business.)  As a result, many of the big-name insurance companies are not selling new policies in high-risk locations.

Insurers use a scoring system that evaluates how much risk of loss there is in a particular location.  A property is given a risk score based on characteristics like accessibility (how easily fire-fighting equipment can get to a property—Ruth said this is the biggest factor), slope, and the amount of fuel nearby.

New insurance policies are available for properties with high risk scores, but one has to go to a specialty insurer, at a much higher cost.  Ruth has not seen any issues of this type for properties in the Berkeley “flats,” where the lack of slope, easier road access and fewer areas of dense vegetation lead to more favorable risk scores.  This can, though, be an issue right now for homes in the Berkeley hills.  (If you live in the hills, this is probably not the time to shop for a new insurance carrier!).

Ruth recommends that everyone periodically review their insurance policy, to make sure you have enough coverage.  Building costs have increased substantially in recent years, so it’s important to make sure your replacement value reflects that.  Ruth also suggests that everyone check the endorsements on their current insurance, to see if you have enough coverage for building code upgrades. She recommends getting building code upgrade coverage of at least 25%, due to newer ordinances that would require expensive improvements if you had to rebuild, such as interior sprinklers, greater seismic resistance and higher energy efficiency.

I live in the hills, so I asked Ruth how much it would cost to insure my house, if I were buying a new insurance policy today.  My home’s risk score turned out to be on the low side for the hills (there are some wide and fairly straight roads between me and the nearest fire stations), but she still estimated that a new policy would cost me double what I am now paying.  I think some of that additional cost is the current situation, and some is probably that I am underinsured in light of higher construction costs.  Time to call my insurance agent!

By |July 2nd, 2019|Categories: Berkeley, General Interest|Tags: , , , , , |

Your Real Estate Expert for Berkeley and Beyond

  • Deep Market Knowledge
  • Analytical, Strategic, Creative
  • Honest, Adept, Direct

“Marilyn is exceptional. Her knowledge base, enthusiasm for her job, professional ethics, organization, sensitivity to our aesthetic requirements, loyalty and gentle perseverance set her apart.”

-- Bill and Carol Seidel

Marilyn Garcia, PhD

Marilyn Garcia, PhD Broker Associate, Realtor® CA DRE LICENSE #01355514

The Grubb Company 1656 Shattuck Avenue Berkeley, CA 94709

Direct: (510) 390-5406

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