Homeowners insurance policy limits questions [California]

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Tricky
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Joined: Fri Jun 17, 2022 7:26 pm

Homeowners insurance policy limits questions [California]

Post by Tricky »

We just got a notice of nonrenewal from our homeowner's policy insurers due to our proximity to higher-risk wildfire areas. California has an "admitted" insurer designation for companies whose rates are submitted to the CA Department of Insurance for evaluation -- none of those admitted insurers will write our policy. So we can either pay much higher rates for a surplus carrier policy or we can get a California FAIR Plan policy, which "provides basic fire insurance coverage for high risk properties when traditional insurance companies will not" but does not cover theft, flood, earthquake, hail, vandalism or personal liability. Then we would get a Difference in Conditions policy from another insurer to approximate the same coverages we would get (between both policies) from one traditional homeowners policy.

However, the CA Fair Plan has a total policy cap of $3M, which would apply to all claims for the dwelling, contents and all other coverages. Our broker is telling me that it would also have a 125% replacement cost cap (our current policy apparently has 200% cap). But these caps don't seem like a problem to me, as our home right now probably would sell for under $1.5M -- with a lower replacement cost -- and while I don't know how much our personal property would be, we certainly don't have any individual assets of unusual value. $1.5M in Southern California doesn't get you that much these days ;) I know that if there were to be a wildfire that wiped out our home there would be other expenses and that its very hard to say based on our individual circumstances, but are there rules of thumb relating to costs that make this $3M cap seem like we'd be underinsured?

We haven't seen the rate quotes yet of the surplus carriers but I'm expecting them to be very high. Trying to decide whether the FAIR policy would work for us.
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