A house in the hills?

[Guest]

Well, I have an accepted offer for a nice house in the Hollywood hills, but I called my insurer and they said they wouldn't insure it due to fire risk. So I'm looking into other insurers, but I wonder if some of you have come across similar problems? It's such a nice house, but how can one buy an uninsurable house? I guess I'll call an independent insurance agent on Monday. Surprisingly, my very experienced agent said she would also have her people look at it, but also seemed flustered by the refusal of insurance.

[+ azdr0710]

maybe change the thread title to something more specific to garner more response??

[+ azdr0710]

I don't understand people who like living in places with extreme geological risks

 

something to consider while you're in the inspection period of your house.....

 

https://the-big-one.scpr.org/stories/

 

https://www.earthquakeauthority.com/Blog/2020/los-angeles-earthquake-prediction-and-risk

 

[Guest]

Contact your prospective neighbors and see who underwrites their insurance. Even high risk properties generally have insurance available in pools reinsured though Lloyds. I’d also we shocked if the state insurance commission allowed this...especially in California

[Luv2play]

Contact your prospective neighbors and see who underwrites their insurance. Even high risk properties generally have insurance available in pools reinsured though Lloyds. I’d also we shocked if the state insurance commission allowed this...especially in California

Actually I think this is a sign of the new normal regarding insurance in California, given the increasing ferocity of wildfires due to climate change. Been reading about it recently in the papers.

[BgMstr4u]

Perhaps the insurance companies are onto something. Perhaps houses in the Southern California hills are not a good idea in our current ecological evolution, nice though they may be. Perhaps the insurers anticipate a decreased willingness on the part of the taxpaying public to provide essentially free fire protection in areas known to be at risk.

[Guest]

Actually I think this is a sign of the new normal regarding insurance in California, given the increasing ferocity of wildfires due to climate change. Been reading about it recently in the papers.

I understand and frankly don’t have California fire based insight or experience. But I do have current Gulf State experience where the typical insurance commissioner will take the position that “if you want to insure any structures in the state, then you must be willing to insure all structures in the state.” In other words, low risk is fine, but you can’t just cherry pick.

 

@Unicorn’s post implies that possibly he was working with a captive agent. So, I expect new options will emerge...but they won’t be cheap. I’ll watch with curiosity.

[Guest MikeThomas]

https://www.nytimes.com/2019/12/05/climate/california-fire-insurance-climate.html?referringSource=articleShare

[Luv2play]

https://www.nytimes.com/2019/12/05/climate/california-fire-insurance-climate.html?referringSource=articleShare

Interesting article but it‘s last year’s news. The fire season started earlier this year because of the record heat levels in California and burned in areas as far north as the Canadian border in the west coast states. The moratorium imposed by the regulators in December is set to expire this December and only applies to dropping existing homeowners, not taking on new policies. As I understnd it it also only applies to people living in ZIP code areas that were burned in 2017/18 fires and not the new areas burnt this year. And of course if governments force insurers to incur catastrophic losses, in the longer run the companies themselves will abandon the business and protection will then fall on the taxpayers.

[Guest]

Interesting article but it‘s last year’s news. The fire season started earlier this year because of the record heat levels in California and burned in areas as far north as the Canadian border in the west coast states. The moratorium imposed by the regulators in December is set to expire this December and only applies to dropping existing homeowners, not taking on new policies. As I understnd it it also only applies to people living in ZIP code areas that were burned in 2017/18 fires and not the new areas burnt this year. And of course if governments force insurers to incur catastrophic losses, in the longer run the companies themselves will abandon the business and protection will then fall on the taxpayers.

They don’t force them to take catastrophic losses...they are allowed to be risk based in premium setting. Charging properly for risk will enable insurers to make their target profit if the pool of insureds is big enough...and it will provide a disincentive to homeowners living in risky areas. Ultimately, it will lower home values in risky areas as homeowners seek to offset the premium cost.

[dbar123]

We have the same issue in MA living on the ocean. Most insurers don’t want the risk. You may find some local insurers who are more comfortable insuring you for a fair price. I would suggest going out and meeting a few of your new neighbors and asking them who they insure with.

[Guest MikeThomas]

They don’t force them to take catastrophic losses...they are allowed to be risk based in premium setting. Charging properly for risk will enable insurers to make their target profit if the pool of insureds is big enough...and it will provide a disincentive to homeowners living in risky areas. Ultimately, it will lower home values in risky areas as homeowners seek to offset the premium cost.

Yup. December 2019. The article paints a grim picture of insurance availability in a climate-changing world. If the article were being written today it would read even direr. When the insurers stop writing insurance, the banks will stop making mortgage loans.

[Epigonos]

Good Luck!!!!! This isn't a new problem in Southern California. Insurances companies have declined to insure hillside homes for years and if forced to by the state the rates are astronomical. I was born in Los Angeles and hillside fires have been a fact of life here my entire life and I'm about to be 80.

[Walker1]

Since you haven't bought the house, maybe figure out how much it will be long term and what is maximum hike allowed per year? Don't you have to contend with mudslides and earthquakes too-in hillside homes?

[Guest]

Since you haven't bought the house, maybe figure out how much it will be long term and what is maximum hike allowed per year? Don't you have to contend with mudslides and earthquakes too-in hillside homes?

I'm having geological inspections as well.

[Guest]

Yup. December 2019. The article paints a grim picture of insurance availability in a climate-changing world. If the article were being written today it would read even direr. When the insurers stop writing insurance, the banks will stop making mortgage loans.

There’s a precedent on the gulf coast...wind insurance (separate from flood). The market has found an equilibrium, insurance is still being written, and mortgages are still being made.

[+ sam.fitzpatrick]

@Unicorn I assume you have already asked the seller who currently provides the coverage.

 

I think your approach with an independent agent will be good as the independent agent will want a commission and have a process to send the property "out for bid" to many providers and bring back multiple quotes.

[+ azdr0710]

some former neighbors lived in the valley during the Northridge quake of 1994.......they later told me it felt like it was "the big one" when it happened.......after paying the $50,000 deductible, insurance covered the rest of their home repairs

[Epigonos]

An aside to this discussion is the fact that most native Southern Californians who are not wealthy scoff at those who chose to live in the foothills or immediately adjacent to the ocean. It is a known and constantly reoccurring fact that the foothills burn up in the fall and then suffer major mud slides during the winter rains. Heavy winter storms are often accompanied by extremely high surfs along the coast which can and do on occasion lead to flooding. After these natural reoccurring conditions people who have lost their homes complain bitterly and demand government assistance to help them rebuild where they should not have built/lived in the first place.

 

In less affluent areas located adjacent to open range government zoning requirements used to require that builders provide a buffer zone between their housing tracts and the open range. During the last couple of decades developers have lobbied local governing bodies to eliminate these buffer zone requirements. Now as many of these same developers have been and still are major contributors to the campaign funds of the members of the local city councils and county board of supervisors the buffer zone requirements have been eliminated. Thus, over the years we have seen an ever-increasing number of open range fires intruding into adjacent housing developments. Oh well as ever MONEY TALKS.

Edited September 21, 2020 by Epigonos

[Guest]

I'm having a couple of insurance agents look at what's available. They should get back to me by Tuesday. The one my realtor recommended said that worst-case scenario, I can get insurance California Fair Plan property insurance, and that it's substantially cheaper than high-risk insurers such as Llloyd's and similar. I should probably start a 2nd string to see if anyone here has had insurance through them...

[Guest]

@Unicorn I assume you have already asked the seller who currently provides the coverage.

...

The problem is that many insurers are less willing to underwrite policies now than they were even a year ago. I have to know what's available at this time...

[thedanNYC]

Actually I think this is a sign of the new normal regarding insurance in California, given the increasing ferocity of wildfires due to climate change gender reveal parties. Been reading about it recently in the papers.

 

Fixed this for you.

[+ BenjaminNicholas]

Well, I have an accepted offer for a nice house in the Hollywood hills, but I called my insurer and they said they wouldn't insure it due to fire risk. So I'm looking into other insurers, but I wonder if some of you have come across similar problems? It's such a nice house, but how can one buy an uninsurable house? I guess I'll call an independent insurance agent on Monday. Surprisingly, my very experienced agent said she would also have her people look at it, but also seemed flustered by the refusal of insurance.

 

I've had the same issues, but with wind/flood writing in South Florida.

 

It took USAA to get me the policy I needed and even then it was more than a few hoops to jump through.

 

Worth it for peace of mind if you're in a danger zone.

[Winky]

I would suggest joining NextDoor for the neighborhood and asking there. In at least one area of the Hills, this question comes up very couple months with a few dozen helpful responses (talk about FairPlan, referrals of agents who have successfully placed fire insurance, etc.). There may also be a local FB page, with the same information. So far, everyone I know has been able to get fire insurance placed, but the rates have been high. I've heard that Lloyds' policies are very difficult to make claims against, sometimes requiring repeat efforts when turned down. I don't have any personal experience with FairPlan... sorry! And GOOD LUCK!! The fire risk is very real, and now annual. Small brush fires started by weed-whackers, blown electrical grid transformers, homeless encampments, tossed cigarette butts... and then spread through properties where effective brush clearance hasn't been done (less and less of that, since the Fire Dept. has gotten much better about inspections, with drones, and very high fees if they have to contract for the clearance work).

[+ bigjoey]

I would suggest joining NextDoor for the neighborhood and asking there. In at least one area of the Hills, this question comes up very couple months with a few dozen helpful responses (talk about FairPlan, referrals of agents who have successfully placed fire insurance, etc.). There may also be a local FB page, with the same information. So far, everyone I know has been able to get fire insurance placed, but the rates have been high. I've heard that Lloyds' policies are very difficult to make claims against, sometimes requiring repeat efforts when turned down. I don't have any personal experience with FairPlan... sorry! And GOOD LUCK!! The fire risk is very real, and now annual. Small brush fires started by weed-whackers, blown electrical grid transformers, homeless encampments, tossed cigarette butts... and then spread through properties where effective brush clearance hasn't been done (less and less of that, since the Fire Dept. has gotten much better about inspections, with drones, and very high fees if they have to contract for the clearance work).

I believe in some areas, building codes now require sprinkler systems in houses.