East Bay Market Update - August 2023

Seriously? We Just Got Cancelled!?

Last month, like a number of our neighbors and clients, my husband and I found a cancellation notice in the mail from our home insurance provider. In our case, the reason for the cancellation was not clear. Is it the type of roof on our home? Is it the size of our home? Are there too many trees on our parcel?

Prompted by this notice, I reached out to a seasoned insurance broker, Steven Klein of Greystone Insurance, seeking more information on the primary reasons for cancellations in the marketplace. Steven’s insight can be found in the side bar.

What should you do if you received a notice of cancellation? First, contact the company or Broker that you worked with on the policy and see if they can assist in preventing the cancellation. Keeping your current insurance may be the best path forward because if you go to a different company, they may require an inspection of your home and decide not to offer a policy because of the four items listed. 

Second, if you worked directly with a company like State Farm or Allstate and they are going to cancel your policy, try reaching out to an insurance broker. Insurance brokers are different in that they often sell policies for 10–20 different companies and can look for one who insures homes in your neighborhood and will do so at the lowest cost.

In the end, our insurance broker worked with the company to maintain the policy on our home. The rate increased by nearly 25%, however, in this insurance environment, keeping the policy we have on the home seems like the prudent choice.

Thank you to Steven for taking the time to share his knowledge and insights about insurance with us. He can be found at https://www.greystoneinsured.com.

Old Home Systems or Systems in Disrepair

Condition is important. Having the major systems in your home relatively updated can be critical. Some insurance companies are using artificial intelligence (AI) and drawing from public records to determine the age of, say, a roof. If they see that the last permit for a roof replacement was 40 years ago, they may ask for proof that the roof has been replaced recently or cancel the policy if the roof is not replaced.

Neighborhood Risk Designations

Changing Insurance companies are changing their mapping for risks like fire. Steven has a client in the Berkeley Hills whose home was not originally considered high-fire risk, now it is. Some insurance companies are working to move out of areas considered higher risk and may either raise the cost of policies annually or cancel them altogether.

Defensible Space and Brush Clearance

For policy renewal, some companies are requiring that brush and trees around the subject property be cleared. Of course, in several of our local cities certain types of trees are protected, like oak trees in Berkeley, which creates a challenge for the homeowner if the insurance company requires the tree to be cut down but the local city will not permit its removal.

Submitting a Claim

Exercise caution when making a claim on your home insurance. Companies can increase your rates or drop you for making even one claim. Consider whether the consequences of making the claim merit the financial burden of the item for which the claim is being made.

Some homeowners and homebuyers have resorted to the California Fair Plan, which is generally more costly, but unless the state’s insurance commissioner can get more private insurers to write policies in high risk areas, it may end up being the only property insurance available.

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