Is it Time to Self-Insure? CA Homeowners Rate Increases

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geobrick
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Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by geobrick »

Just got a notice from State Farm that my premium will be increasing by 300% (4x what is now). That seems excessive!

I can't help wondering what would have happened if back in 2000, I invested the monthly premiums in an S&P 500 index fund instead of paying for a homeowner's policy and used that account to cover any damage or replacement in that time? There was no way to know back then what the future held but in hindsight I would have been OK I think.

With the huge premium increase coming, I'm seriously considering self-insuring now or maybe there are some private insurance pools or community run insurance pools that exist to help spread the risk.

I've been in the same house for 24 years with only 2 minor claims in that time but nothing in the last 5 years. I'm pretty sure it's the CA fires they're concerned about but in the 24 years I've been here, there haven't been any homes in our area affected. I'm not saying fires aren't possible. There have been a few that have threatened the area but so far none that have come through and caused any home damage.

Any thoughts?
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by snackdog »

SF is usually your best bet in CA but check with as many others as you can as quotes can vary by a factor of 3-5x.

Self-insuring is a great option if you can afford to rebuild on your own dime in case of a fire and if you have other means of providing yourself personal injury liability related to the property. If you drop property insurance you would have trouble getting umbrella, as you may know.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by fortunefavored »

300% seems remarkable, it appears they were approved for a 28.1% increase. For various reasons, CA homeowner's insurance prices have been held down compared to other markets, so the insurance department is attempting to catch up rates by allowing large increases (historically getting anything past 10% was pretty much impossible.)

Are you in a wildfire-urban interface zone? You will probably find no other insurers willing to write you a policy. You can look up your property here: https://calfire-forestry.maps.arcgis.co ... 7ab693d008

There are no alternatives other than the state pool aka FAIR plan (which will cost even more and have far worse coverage.)

So far there is no solution in sight.
toddthebod
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by toddthebod »

By definition most people are going to lose money buying insurance.

Do you have a mortgage?
260chrisb
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by 260chrisb »

toddthebod wrote: Tue Mar 05, 2024 8:24 am By definition most people are going to lose money buying insurance.

Do you have a mortgage?
If so it would be a requirement yes? So the question is; can you afford to cover the cost of a new home out of pocket. Saving money is great, paying for insurance sucks but risk management is important.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by toddthebod »

260chrisb wrote: Tue Mar 05, 2024 8:34 am
toddthebod wrote: Tue Mar 05, 2024 8:24 am By definition most people are going to lose money buying insurance.

Do you have a mortgage?
If so it would be a requirement yes? So the question is; can you afford to cover the cost of a new home out of pocket. Saving money is great, paying for insurance sucks but risk management is important.
Right, the mortgage lender requires fire insurance, and while OP may have his house paid off now, his speculation about what might have happened had he gone without insurance when he bought the house 24 years ago may be moot. (Well, it's obviously moot since it's the past, but it's doubly moot if he was required to buy the insurance.)

As far as actionable advice for OP, look into very high deductible options (like $50,000) before you give up on insurance altogether.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by Hillview »

do you qualify for USAA (served in military or have family (eg parents, grandparents) who have served? they seem to have good rates.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by scifilover »

toddthebod wrote: Tue Mar 05, 2024 8:24 am By definition most people are going to lose money buying insurance.

Do you have a mortgage?
When you buy a house you get the benefits that come with your ownership. However, with ownership comes risk. Most people don't understand the idea of risk. Because of this they feel than when they buy insurance and don't have a claim that they only have a loss. While this loss does exist, in truth, each year there is a calculable potential chance for a home to be damaged or destroyed by fire (or other peril). If your home is destroyed by fire and you don't have insurance your loss is total value of the structure and its contents. While the chance of this loss happening is small, it is a real. However, you cannot know in advance if your home will be one of the those that are damaged or destroyed. So from your standpoint your actual future loss each year is unknown. Insurance offers you a opportunity to exchange this unknown potential loss, for a known loss, the premium. So, when you pay the premium, the insurance company assumes for that year, your risk of loss. When you paid the premium you did receive something, albeit intangible; knowing that your unknown future loss would be covered.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by fortunefavored »

Hillview wrote: Tue Mar 05, 2024 9:26 am do you qualify for USAA (served in military or have family (eg parents, grandparents) who have served? they seem to have good rates.
As of August last year, USAA will not insure new customers in California unless their fire risk rating is 1 (On a scale of 1 to 32.)

They have effectively stopped writing new policies without the bad PR of saying that.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by Hillview »

fortunefavored wrote: Tue Mar 05, 2024 9:40 am
Hillview wrote: Tue Mar 05, 2024 9:26 am do you qualify for USAA (served in military or have family (eg parents, grandparents) who have served? they seem to have good rates.
As of August last year, USAA will not insure new customers in California unless their fire risk rating is 1 (On a scale of 1 to 32.)

They have effectively stopped writing new policies without the bad PR of saying that.
wow I did not know that thanks for sharing. our policy went up 10% y/y I cannot seem to find a website that shows a score out of 32. I found the cal fire that has moderate/severe etc and riskfactor.com that is 1-5. thanks for sharing if you know where to find this score.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by fortunefavored »

Hillview wrote: Tue Mar 05, 2024 9:52 am
fortunefavored wrote: Tue Mar 05, 2024 9:40 am
Hillview wrote: Tue Mar 05, 2024 9:26 am do you qualify for USAA (served in military or have family (eg parents, grandparents) who have served? they seem to have good rates.
As of August last year, USAA will not insure new customers in California unless their fire risk rating is 1 (On a scale of 1 to 32.)

They have effectively stopped writing new policies without the bad PR of saying that.
wow I did not know that thanks for sharing. our policy went up 10% y/y I cannot seem to find a website that shows a score out of 32. I found the cal fire that has moderate/severe etc and riskfactor.com that is 1-5. thanks for sharing if you know where to find this score.
Unfortunately it is a proprietary score, but you can see what the old thresholds were on this article:
https://sfstandard.com/2023/08/31/insur ... alifornia/ - you can see the lowest cut-off before was 12.

If you are in any wildland/urban interface area, guaranteed your score is greater than 1.

As part of the reform packages last year, insurers are required to share their wildfire scoring matrix and inputs.. but I haven't heard of any customers receiving this information yet.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by BrooklynInvest »

toddthebod wrote: Tue Mar 05, 2024 8:35 am
As far as actionable advice for OP, look into very high deductible options (like $50,000) before you give up on insurance altogether.
I think this is great advice. Higher deductible and possibly (possibly) lower amount OP? This may not be as applicable in your neck of the woods but where I am the house value is largely land. The rebuild cost is less than half of the value of the property itself so we insure (with a large cushion) the rebuild cost rather than total cost.

It's worth a call but USAA was only able to offer me auto insurance - we're a gold star family. It may differ by region but they were the cheapest option.

Me, I'd do what I could to keep at least some coverage. Good luck OP,
260chrisb
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by 260chrisb »

Care to share home value and premium costs?
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by neowiser »

I've thought about self-insurance for earthquake coverage. Our CEA premium is almost as much as our homeowner's premium with Amica. Amica actually dropped our premium by $100 this year, even though coverage increased. Years ago they would issue an annual rebate check if they had an exceptionally profitable year, so perhaps the lower premium reflects that practice. We've had our home and auto coverage with them for more than 30 years with only one no-fault auto claim, but we do live within a mile of a wilderness park with a history of fires.
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geobrick
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by geobrick »

snackdog wrote: Tue Mar 05, 2024 1:09 am SF is usually your best bet in CA but check with as many others as you can as quotes can vary by a factor of 3-5x.

Self-insuring is a great option if you can afford to rebuild on your own dime in case of a fire and if you have other means of providing yourself personal injury liability related to the property. If you drop property insurance you would have trouble getting umbrella, as you may know.
Good advice. Getting quotes from other companies will be my first step but for some reason my mind jumped immediately to self-insuring.
Unlike health insurance, the cost of a worst-case expense is a known amount (a complete rebuild). Of course the real risk lies in when a catastrophic loss happens. Will it be the first year or the 20th year? I'm not including any loss from liability which would not be limited (things an umbrella policy would cover).

State Farm offered a bunch of ways to reduce the premium but then I'd be getting less coverage and probably still be paying more. I'll have to look at their suggestions.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by geobrick »

fortunefavored wrote: Tue Mar 05, 2024 8:11 am 300% seems remarkable, it appears they were approved for a 28.1% increase. For various reasons, CA homeowner's insurance prices have been held down compared to other markets, so the insurance department is attempting to catch up rates by allowing large increases (historically getting anything past 10% was pretty much impossible.)

Are you in a wildfire-urban interface zone? You will probably find no other insurers willing to write you a policy. You can look up your property here: https://calfire-forestry.maps.arcgis.co ... 7ab693d008

There are no alternatives other than the state pool aka FAIR plan (which will cost even more and have far worse coverage.)

So far there is no solution in sight.
I checked your link and my house is VERY close to a big red area (there's open space with lot's of brush). State Farm's email said, "the statewide FIRE BRUSH MAPS have been updated this year causing significant premium adjustments for the area"
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by fortunefavored »

geobrick wrote: Tue Mar 05, 2024 12:14 pm I checked your link and my house is VERY close to a big red area (there's open space with lot's of brush). State Farm's email said, "the statewide FIRE BRUSH MAPS have been updated this year causing significant premium adjustments for the area"
I think you'll find there are no carriers that will write you a policy, but please report back with what you find. If you let your state farm policy expire, you will have no option other than the FAIR plan (State Farm is not writing new policies in CA either.)

In theory they're required to share how they calculate your fire risk, and things you can do to reduce it.. but I have yet to hear of anyone actually getting this information.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by anagram »

fortunefavored wrote: Tue Mar 05, 2024 8:11 am 300% seems remarkable, it appears they were approved for a 28.1% increase. For various reasons, CA homeowner's insurance prices have been held down compared to other markets, so the insurance department is attempting to catch up rates by allowing large increases (historically getting anything past 10% was pretty much impossible.)

Are you in a wildfire-urban interface zone? You will probably find no other insurers willing to write you a policy. You can look up your property here: https://calfire-forestry.maps.arcgis.co ... 7ab693d008

There are no alternatives other than the state pool aka FAIR plan (which will cost even more and have far worse coverage.)

So far there is no solution in sight.
CA homeowner's insurance prices have been held down compared to other markets
This is news to me. Do you have a reference for this statement?
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by geobrick »

toddthebod wrote: Tue Mar 05, 2024 8:24 am By definition most people are going to lose money buying insurance.

Do you have a mortgage?
I still have a mortgage and I don't want to pay it off because the rate is so low. Are you saying the bank will insist on insurance?
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by geobrick »

Hillview wrote: Tue Mar 05, 2024 9:26 am do you qualify for USAA (served in military or have family (eg parents, grandparents) who have served? they seem to have good rates.
How about a parent no longer living? I just remembered my wife's dad was in the Military. Will that count for USAA?
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by terran »

geobrick wrote: Tue Mar 05, 2024 12:37 pm I still have a mortgage and I don't want to pay it off because the rate is so low. Are you saying the bank will insist on insurance?
Yes, definitely, and based on a similar thread from someone in Florida they'll probably buy a policy for you at higher cost and bill you for it.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by geobrick »

fortunefavored wrote: Tue Mar 05, 2024 9:40 am
Hillview wrote: Tue Mar 05, 2024 9:26 am do you qualify for USAA (served in military or have family (eg parents, grandparents) who have served? they seem to have good rates.
As of August last year, USAA will not insure new customers in California unless their fire risk rating is 1 (On a scale of 1 to 32.)

They have effectively stopped writing new policies without the bad PR of saying that.
So that option is off the table though I may consider them for car insurance if I qualify with my wife's dad serving way back.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by fortunefavored »

anagram wrote: Tue Mar 05, 2024 12:35 pm
fortunefavored wrote: Tue Mar 05, 2024 8:11 am 300% seems remarkable, it appears they were approved for a 28.1% increase. For various reasons, CA homeowner's insurance prices have been held down compared to other markets, so the insurance department is attempting to catch up rates by allowing large increases (historically getting anything past 10% was pretty much impossible.)

Are you in a wildfire-urban interface zone? You will probably find no other insurers willing to write you a policy. You can look up your property here: https://calfire-forestry.maps.arcgis.co ... 7ab693d008

There are no alternatives other than the state pool aka FAIR plan (which will cost even more and have far worse coverage.)

So far there is no solution in sight.
CA homeowner's insurance prices have been held down compared to other markets
This is news to me. Do you have a reference for this statement?
My google-fu is failing right now - but it's mostly an effect of Prop 103 - the insurance commissioner can reject any rate it doesn't like (and that is an elected position), prop 103 requires insurance companies to use 20 year loss rates on wildfires in their rate increases, pretty much anyone can challenge a submitted rate increase and then the insurance companies have to rejustify it, etc.

Here's an article related to some of prop 103 challenges (no clue how unbiased):
https://laweconcenter.org/resources/ret ... egulation/

"Californians in 2020 paid an annual average of $1,285 in homeowners insurance premiums across all policy types—less than the national average of $1,319." and obviously CA is not average in rebuild costs, risks & wildfire losses.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by geobrick »

toddthebod wrote: Tue Mar 05, 2024 8:35 am As far as actionable advice for OP, look into very high deductible options (like $50,000) before you give up on insurance altogether.
Thanks. I plan to go through their list of options to reduce the rate including a higher deductible.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by tjtv »

geobrick wrote: Tue Mar 05, 2024 12:51 am
I've been in the same house for 24 years with only 2 minor claims in that time but nothing in the last 5 years. I'm pretty sure it's the CA fires they're concerned about but in the 24 years I've been here, there haven't been any homes in our area affected. I'm not saying fires aren't possible. There have been a few that have threatened the area but so far none that have come through and caused any home damage.
I think your previous claims are mostly unrelated to the premium increases that seem mostly related to fire risk. But 2 claims in 24 years probably puts you a bit over the average customer that has zero claims over 24 years. In any given year 5%-7% of customers make a claim on their homeowners policy.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by anagram »

fortunefavored wrote: Tue Mar 05, 2024 12:50 pm
anagram wrote: Tue Mar 05, 2024 12:35 pm
fortunefavored wrote: Tue Mar 05, 2024 8:11 am 300% seems remarkable, it appears they were approved for a 28.1% increase. For various reasons, CA homeowner's insurance prices have been held down compared to other markets, so the insurance department is attempting to catch up rates by allowing large increases (historically getting anything past 10% was pretty much impossible.)

Are you in a wildfire-urban interface zone? You will probably find no other insurers willing to write you a policy. You can look up your property here: https://calfire-forestry.maps.arcgis.co ... 7ab693d008

There are no alternatives other than the state pool aka FAIR plan (which will cost even more and have far worse coverage.)

So far there is no solution in sight.
CA homeowner's insurance prices have been held down compared to other markets
This is news to me. Do you have a reference for this statement?
My google-fu is failing right now - but it's mostly an effect of Prop 103 - the insurance commissioner can reject any rate it doesn't like (and that is an elected position), prop 103 requires insurance companies to use 20 year loss rates on wildfires in their rate increases, pretty much anyone can challenge a submitted rate increase and then the insurance companies have to rejustify it, etc.

Here's an article related to some of prop 103 challenges (no clue how unbiased):
https://laweconcenter.org/resources/ret ... egulation/

"Californians in 2020 paid an annual average of $1,285 in homeowners insurance premiums across all policy types—less than the national average of $1,319." and obviously CA is not average in rebuild costs, risks & wildfire losses.
And other parts of the country have tornadoes, wildfires and hurricanes. I see no evidence that CA homeowner's insurance prices have been held down compared to other markets. $1,285 vs $1,319 is not significant.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by RetiredAL »

fortunefavored wrote: Tue Mar 05, 2024 8:11 am 300% seems remarkable, it appears they were approved for a 28.1% increase. For various reasons, CA homeowner's insurance prices have been held down compared to other markets, so the insurance department is attempting to catch up rates by allowing large increases (historically getting anything past 10% was pretty much impossible.)

Are you in a wildfire-urban interface zone? You will probably find no other insurers willing to write you a policy. You can look up your property here: https://calfire-forestry.maps.arcgis.co ... 7ab693d008

There are no alternatives other than the state pool aka FAIR plan (which will cost even more and have far worse coverage.)

So far there is no solution in sight.
This map is misleadingly incomplete. It only shows fire ratings for 'State Responsibility Areas'. The insurance people know that there is fire dangers in Large City Areas too.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by beardsicles »

anagram wrote: Tue Mar 05, 2024 1:25 pm
fortunefavored wrote: Tue Mar 05, 2024 12:50 pm
anagram wrote: Tue Mar 05, 2024 12:35 pm
fortunefavored wrote: Tue Mar 05, 2024 8:11 am 300% seems remarkable, it appears they were approved for a 28.1% increase. For various reasons, CA homeowner's insurance prices have been held down compared to other markets, so the insurance department is attempting to catch up rates by allowing large increases (historically getting anything past 10% was pretty much impossible.)

Are you in a wildfire-urban interface zone? You will probably find no other insurers willing to write you a policy. You can look up your property here: https://calfire-forestry.maps.arcgis.co ... 7ab693d008

There are no alternatives other than the state pool aka FAIR plan (which will cost even more and have far worse coverage.)

So far there is no solution in sight.
CA homeowner's insurance prices have been held down compared to other markets
This is news to me. Do you have a reference for this statement?
My google-fu is failing right now - but it's mostly an effect of Prop 103 - the insurance commissioner can reject any rate it doesn't like (and that is an elected position), prop 103 requires insurance companies to use 20 year loss rates on wildfires in their rate increases, pretty much anyone can challenge a submitted rate increase and then the insurance companies have to rejustify it, etc.

Here's an article related to some of prop 103 challenges (no clue how unbiased):
https://laweconcenter.org/resources/ret ... egulation/

"Californians in 2020 paid an annual average of $1,285 in homeowners insurance premiums across all policy types—less than the national average of $1,319." and obviously CA is not average in rebuild costs, risks & wildfire losses.
And other parts of the country have tornadoes, wildfires and hurricanes. I see no evidence that CA homeowner's insurance prices have been held down compared to other markets. $1,285 vs $1,319 is not significant.
California’s 300% insurance price increases should have happened a decade ago and it was prevented. The low average in California is a reflection of the fact that the market wasn’t allowed to appropriately price risk.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by anagram »

beardsicles wrote: Tue Mar 05, 2024 2:01 pm
anagram wrote: Tue Mar 05, 2024 1:25 pm
fortunefavored wrote: Tue Mar 05, 2024 12:50 pm
anagram wrote: Tue Mar 05, 2024 12:35 pm
fortunefavored wrote: Tue Mar 05, 2024 8:11 am 300% seems remarkable, it appears they were approved for a 28.1% increase. For various reasons, CA homeowner's insurance prices have been held down compared to other markets, so the insurance department is attempting to catch up rates by allowing large increases (historically getting anything past 10% was pretty much impossible.)

Are you in a wildfire-urban interface zone? You will probably find no other insurers willing to write you a policy. You can look up your property here: https://calfire-forestry.maps.arcgis.co ... 7ab693d008

There are no alternatives other than the state pool aka FAIR plan (which will cost even more and have far worse coverage.)

So far there is no solution in sight.
CA homeowner's insurance prices have been held down compared to other markets
This is news to me. Do you have a reference for this statement?
My google-fu is failing right now - but it's mostly an effect of Prop 103 - the insurance commissioner can reject any rate it doesn't like (and that is an elected position), prop 103 requires insurance companies to use 20 year loss rates on wildfires in their rate increases, pretty much anyone can challenge a submitted rate increase and then the insurance companies have to rejustify it, etc.

Here's an article related to some of prop 103 challenges (no clue how unbiased):
https://laweconcenter.org/resources/ret ... egulation/

"Californians in 2020 paid an annual average of $1,285 in homeowners insurance premiums across all policy types—less than the national average of $1,319." and obviously CA is not average in rebuild costs, risks & wildfire losses.
And other parts of the country have tornadoes, wildfires and hurricanes. I see no evidence that CA homeowner's insurance prices have been held down compared to other markets. $1,285 vs $1,319 is not significant.
California’s 300% insurance price increases should have happened a decade ago and it was prevented. The low average in California is a reflection of the fact that the market wasn’t allowed to appropriately price risk.
What 300% increase? For an ordinary house in an urban area? Where did you get 300% from?
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by beardsicles »

anagram wrote: Tue Mar 05, 2024 2:22 pm
beardsicles wrote: Tue Mar 05, 2024 2:01 pm
anagram wrote: Tue Mar 05, 2024 1:25 pm
fortunefavored wrote: Tue Mar 05, 2024 12:50 pm
anagram wrote: Tue Mar 05, 2024 12:35 pm



This is news to me. Do you have a reference for this statement?
My google-fu is failing right now - but it's mostly an effect of Prop 103 - the insurance commissioner can reject any rate it doesn't like (and that is an elected position), prop 103 requires insurance companies to use 20 year loss rates on wildfires in their rate increases, pretty much anyone can challenge a submitted rate increase and then the insurance companies have to rejustify it, etc.

Here's an article related to some of prop 103 challenges (no clue how unbiased):
https://laweconcenter.org/resources/ret ... egulation/

"Californians in 2020 paid an annual average of $1,285 in homeowners insurance premiums across all policy types—less than the national average of $1,319." and obviously CA is not average in rebuild costs, risks & wildfire losses.
And other parts of the country have tornadoes, wildfires and hurricanes. I see no evidence that CA homeowner's insurance prices have been held down compared to other markets. $1,285 vs $1,319 is not significant.
California’s 300% insurance price increases should have happened a decade ago and it was prevented. The low average in California is a reflection of the fact that the market wasn’t allowed to appropriately price risk.
What 300% increase? For an ordinary house in an urban area? Where did you get 300% from?
Literally from the first line of the post.
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geobrick
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by geobrick »

260chrisb wrote: Tue Mar 05, 2024 10:19 am Care to share home value and premium costs?
Sure (at the risk of losing any sympathy for my 300% premium increase :happy).
Paid $1,050,000 in 2000. Zillow claims $2,513,000 today.

Here are some past policies and premiums.
In 2000, my premium, covering a dwelling valued at $750,000 with a 10% deductible was only $639 ($2,774 with $2,169 in discounts applied).
I also had a CEA Earthquake policy with a 15% deductible. The premium was $1,538.

Jump to 2023:
Homeowner's Premium $4,057 with dwelling valued at 1,971,000 (deductible is 1/2% I don't know when in 23 years I chose that deductible too small)
CEA Premium $1,346 same dwelling value (sometimes the premium goes down - its run by the state).

The new 2024 premium will be $16,309! with the dwelling now valued at $2,101,000 (deductible is 1/2%).
The CEA premium will be $1,434.

I'm going to consider their suggestion of increasing the deductible plus look at some of the small discounts for wildfire mitigation that I think my house already meets.
Last edited by geobrick on Fri Mar 08, 2024 11:34 am, edited 1 time in total.
fortunefavored
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by fortunefavored »

RetiredAL wrote: Tue Mar 05, 2024 1:55 pm
fortunefavored wrote: Tue Mar 05, 2024 8:11 am 300% seems remarkable, it appears they were approved for a 28.1% increase. For various reasons, CA homeowner's insurance prices have been held down compared to other markets, so the insurance department is attempting to catch up rates by allowing large increases (historically getting anything past 10% was pretty much impossible.)

Are you in a wildfire-urban interface zone? You will probably find no other insurers willing to write you a policy. You can look up your property here: https://calfire-forestry.maps.arcgis.co ... 7ab693d008

There are no alternatives other than the state pool aka FAIR plan (which will cost even more and have far worse coverage.)

So far there is no solution in sight.
This map is misleadingly incomplete. It only shows fire ratings for 'State Responsibility Areas'. The insurance people know that there is fire dangers in Large City Areas too.
Here's a view that tries to merge the Local Responsibility Zones too, but I think it is using older data, but gives you a flavor in some city areas like LA:
https://forestwatch.maps.arcgis.com/app ... f89ce5d153

And yes, insurance companies can use any risk models they want, but being in the "very high severity" area is basically a blacklist in the current market across the board.
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geobrick
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by geobrick »

beardsicles wrote: Tue Mar 05, 2024 2:32 pm
anagram wrote: Tue Mar 05, 2024 2:22 pm
beardsicles wrote: Tue Mar 05, 2024 2:01 pm California’s 300% insurance price increases should have happened a decade ago and it was prevented. The low average in California is a reflection of the fact that the market wasn’t allowed to appropriately price risk.
What 300% increase? For an ordinary house in an urban area? Where did you get 300% from?
Literally from the first line of the post.
That's just my premium increase. I'm sure I'm an outlier. I think the avg increase across CA is 20%.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by fortunefavored »

geobrick wrote: Tue Mar 05, 2024 2:47 pm I'm going to consider their suggestion of increasing the deductible plus look at some of the small discounts for wildfire mitigation that I think my house already meets.
Can you share the list of wildfire mitigation items and how much of a discount they're offering? ie, if you did EVERYTHING, what would they charge you?

$16K seems like it is more than the FAIR plan, that may be worth pursuing with a broker. It only covers the structure (no contents, no liability, etc.) Although I am told some companies offer a "wrapper" policy for those needs.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by anagram »

beardsicles wrote: Tue Mar 05, 2024 2:32 pm
anagram wrote: Tue Mar 05, 2024 2:22 pm
beardsicles wrote: Tue Mar 05, 2024 2:01 pm
anagram wrote: Tue Mar 05, 2024 1:25 pm
fortunefavored wrote: Tue Mar 05, 2024 12:50 pm

My google-fu is failing right now - but it's mostly an effect of Prop 103 - the insurance commissioner can reject any rate it doesn't like (and that is an elected position), prop 103 requires insurance companies to use 20 year loss rates on wildfires in their rate increases, pretty much anyone can challenge a submitted rate increase and then the insurance companies have to rejustify it, etc.

Here's an article related to some of prop 103 challenges (no clue how unbiased):
https://laweconcenter.org/resources/ret ... egulation/

"Californians in 2020 paid an annual average of $1,285 in homeowners insurance premiums across all policy types—less than the national average of $1,319." and obviously CA is not average in rebuild costs, risks & wildfire losses.
And other parts of the country have tornadoes, wildfires and hurricanes. I see no evidence that CA homeowner's insurance prices have been held down compared to other markets. $1,285 vs $1,319 is not significant.
California’s 300% insurance price increases should have happened a decade ago and it was prevented. The low average in California is a reflection of the fact that the market wasn’t allowed to appropriately price risk.
What 300% increase? For an ordinary house in an urban area? Where did you get 300% from?
Literally from the first line of the post.
Literally one person who lives in a FIRE area. You stated "California’s 300% insurance price increases", implying CA wide 300% increases were somehow prevented.

People seem to throw around huge numbers that are unsubstantiated.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by funyun »

The insurance market in california is so insane. We recently switched to an independent agent because we were having trouble finding car and renter's insurance - all the insurers are leaving the state or doing things to discourage california residents from becoming customers (Geico, for example, said that we had to go through underwriting, and then 3 weeks later sent a letter in the mail saying that they needed hard copies of a bunch of info and that it was all due a week before the letter was even postmarked). And we are perfectly good customers, no accidents, only need standard renter's insurance. Our agent was able to find us insurance that took about 4 months to complete the underwriting for. She said that in her 40 years selling insurance in California, she has never seen anything like the environment we are in now, it's totally insane.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by geobrick »

fortunefavored wrote: Tue Mar 05, 2024 3:00 pm
geobrick wrote: Tue Mar 05, 2024 2:47 pm I'm going to consider their suggestion of increasing the deductible plus look at some of the small discounts for wildfire mitigation that I think my house already meets.
Can you share the list of wildfire mitigation items and how much of a discount they're offering? ie, if you did EVERYTHING, what would they charge you?

$16K seems like it is more than the FAIR plan, that may be worth pursuing with a broker. It only covers the structure (no contents, no liability, etc.) Although I am told some companies offer a "wrapper" policy for those needs.
They mention a 5% discount for fire mitigation covering things like roofing and siding materials. I've got a cement tile roof with stucco siding, so I think I'm good there. I also have a fire sprinkler system (but I think they already knew that). The discount also requires some distance from trees and shrubs which I can probably meet with some trimming of shrubs and cutting back a few trees.

The premium does include other things like personal property and liability. I'll have to see what those contribute to the big increase.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by fortunefavored »

geobrick wrote: Tue Mar 05, 2024 3:28 pm
fortunefavored wrote: Tue Mar 05, 2024 3:00 pm
geobrick wrote: Tue Mar 05, 2024 2:47 pm I'm going to consider their suggestion of increasing the deductible plus look at some of the small discounts for wildfire mitigation that I think my house already meets.
Can you share the list of wildfire mitigation items and how much of a discount they're offering? ie, if you did EVERYTHING, what would they charge you?

$16K seems like it is more than the FAIR plan, that may be worth pursuing with a broker. It only covers the structure (no contents, no liability, etc.) Although I am told some companies offer a "wrapper" policy for those needs.
They mention a 5% discount for fire mitigation covering things like roofing and siding materials. I've got a cement tile roof with stucco siding, so I think I'm good there. I also have a fire sprinkler system (but I think they already knew that). The discount also requires some distance from trees and shrubs which I can probably meet with some trimming of shrubs and cutting back a few trees.

The premium does include other things like personal property and liability. I'll have to see what those contribute to the big increase.
oof, 5% doesn't seem much when talking about $16K. Thanks for the information.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by RetiredAL »

fortunefavored wrote: Tue Mar 05, 2024 3:00 pm
geobrick wrote: Tue Mar 05, 2024 2:47 pm I'm going to consider their suggestion of increasing the deductible plus look at some of the small discounts for wildfire mitigation that I think my house already meets.
Can you share the list of wildfire mitigation items and how much of a discount they're offering? ie, if you did EVERYTHING, what would they charge you?

$16K seems like it is more than the FAIR plan, that may be worth pursuing with a broker. It only covers the structure (no contents, no liability, etc.) Although I am told some companies offer a "wrapper" policy for those needs.
CSAA does a wrapper.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by exodusNH »

geobrick wrote: Tue Mar 05, 2024 12:37 pm
toddthebod wrote: Tue Mar 05, 2024 8:24 am By definition most people are going to lose money buying insurance.

Do you have a mortgage?
I still have a mortgage and I don't want to pay it off because the rate is so low. Are you saying the bank will insist on insurance?
Oh, they definitely require it. If you let it lapse, they will buy you a non-standard policy covering only their interest for 3-4x that you'd pay.

I inadvertently let mine lapse. The vendor eventually got a policy for the mortgage balance from a company I've never heard of. It was $3600/yr. No liability coverage. No personal effects. My normal insurance was around $900/yr.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by madbrain »

geobrick wrote: Tue Mar 05, 2024 2:47 pm
260chrisb wrote: Tue Mar 05, 2024 10:19 am Care to share home value and premium costs?
Sure (at the risk of losing any sympathy for my 300% premium increase :happy).
Paid $1,050,000 in 2000. Zillow claims $2,513,000 today.

Here are some past policies and premiums.
In 2000, my premium, covering a dwelling valued at $750,000 with a 10% deductible was only $639 ($2,774 with $2,169 in discounts applied).
I also had a CEA Earthquake policy with a 15% deductible. The premium was $1,538.

Jump to 2023:
Homeowner's Premium $4,057 with dwelling valued at 1,971,000 (deductible is 1/2% I don't know when in 23 years I chose that deductible too small)
CEA Premium $1,346 same dwelling value (sometimes the premium goes down - its run by the state).

The new 2024 premium will be $16,309! with the dwelling now valued at $2,101,000 (deductible is 1/2%).
The CEA premium will be

I'm going to consider their suggestion of increasing the deductible plus look at some of the small discounts for wildfire mitigation that I think my house already meets.

I'm really surprised by your low CEA premiums. Ours have been quoted as $14k+ for as long as I can remember in this home I bought 14 years ago. I have never purchased it because it's unaffordable and the deductible is way too high to be useful. Also, a structural engineer told me I didn't need it.

Home is about the same value and replacement cost as yours. Our premium for fire/personal property nearly doubled last December to a little over $4K.
We're with Farmer's right now. I think they also stopped writing new CA policies.
Home is in a gray area on the Calfire map. Not far from an orange area.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by anagram »

madbrain wrote: Tue Mar 05, 2024 4:02 pm
geobrick wrote: Tue Mar 05, 2024 2:47 pm
260chrisb wrote: Tue Mar 05, 2024 10:19 am Care to share home value and premium costs?
Sure (at the risk of losing any sympathy for my 300% premium increase :happy).
Paid $1,050,000 in 2000. Zillow claims $2,513,000 today.

Here are some past policies and premiums.
In 2000, my premium, covering a dwelling valued at $750,000 with a 10% deductible was only $639 ($2,774 with $2,169 in discounts applied).
I also had a CEA Earthquake policy with a 15% deductible. The premium was $1,538.

Jump to 2023:
Homeowner's Premium $4,057 with dwelling valued at 1,971,000 (deductible is 1/2% I don't know when in 23 years I chose that deductible too small)
CEA Premium $1,346 same dwelling value (sometimes the premium goes down - its run by the state).

The new 2024 premium will be $16,309! with the dwelling now valued at $2,101,000 (deductible is 1/2%).
The CEA premium will be

I'm going to consider their suggestion of increasing the deductible plus look at some of the small discounts for wildfire mitigation that I think my house already meets.

I'm really surprised by your low CEA premiums. Ours have been quoted as $14k+ for as long as I can remember in this home I bought 14 years ago. I have never purchased it because it's unaffordable and the deductible is way too high to be useful. Also, a structural engineer told me I didn't need it.

Home is about the same value and replacement cost as yours. Our premium for fire/personal property nearly doubled last December to a little over $4K.
We're with Farmer's right now. I think they also stopped writing new CA policies.
Home is in a gray area on the Calfire map. Not far from an orange area.
$14K in San Jose? How is this possible?
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by madbrain »

anagram wrote: Tue Mar 05, 2024 4:18 pm $14K in San Jose? How is this possible?
I am not really sure. The CEA model is impenetrable to me. I assume this has to do with some fault map.
My home is in the hills in east San Jose. I think it must be the proximity to the Calaveras fault.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by johnny_mac »

geobrick wrote: Tue Mar 05, 2024 12:08 pm
Good advice. Getting quotes from other companies will be my first step but for some reason my mind jumped immediately to self-insuring.
Unlike health insurance, the cost of a worst-case expense is a known amount (a complete rebuild). Of course the real risk lies in when a catastrophic loss happens. Will it be the first year or the 20th year? I'm not including any loss from liability which would not be limited (things an umbrella policy would cover).

State Farm offered a bunch of ways to reduce the premium but then I'd be getting less coverage and probably still be paying more. I'll have to look at their suggestions.
Recently, I've been thinking about self-insurance as well. Our insurance company put us on "notice" because we had some trees close to the house (from a view from Google Earth, which wasn't all that accurate). We trimmed the trees aggressively and sent them pictures, but I think they may have done it as a prelude to shutting us down. While it wouldn't be pretty I could afford to rebuild and investing insurance premiums along the way would increase the nest egg even more. Plus, if we were in that situation, I wouldn't be waiting around for the insurance company to agree the house was toast before I could start building, which would be advantageous when competing with scarce construction resources.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by fortunefavored »

madbrain wrote: Tue Mar 05, 2024 4:31 pm
anagram wrote: Tue Mar 05, 2024 4:18 pm $14K in San Jose? How is this possible?
I am not really sure. The CEA model is impenetrable to me. I assume this has to do with some fault map.
My home is in the hills in east San Jose. I think it must be the proximity to the Calaveras fault.
Weirdly, CEA is allowed to do what insurance companies in CA have NOT been able to do (until recent rulings) - which is charge based on catastrophic risk modeling. FAIR is allowed to too.

I don't carry CEA either, although it isn't $14K, the huge deductible and low maximum payout doesn't seem worth it.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by anagram »

madbrain wrote: Tue Mar 05, 2024 4:31 pm
anagram wrote: Tue Mar 05, 2024 4:18 pm $14K in San Jose? How is this possible?
I am not really sure. The CEA model is impenetrable to me. I assume this has to do with some fault map.
My home is in the hills in east San Jose. I think it must be the proximity to the Calaveras fault.
Yes, I think it has to be a fault line. But $14K. :shock:
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by LotsaGray »

geobrick wrote: Tue Mar 05, 2024 12:37 pm
toddthebod wrote: Tue Mar 05, 2024 8:24 am By definition most people are going to lose money buying insurance.

Do you have a mortgage?
I still have a mortgage and I don't want to pay it off because the rate is so low. Are you saying the bank will insist on insurance?
I am sorry but is this question even real? You think any company is going to loan hundreds of K if not millions of $ take the house as collateral but not insist on insurance? How does one get enough dollars to take such a mortgage but not know insurance is required. Same thing with having an auto loan and needing to carry collision insurance.

Yes you are required to carry insurance on property used as collateral. At least for real estate and cars. Your house burns to ground. You have $700K mortgage and it’s going to cost you $500 K to rebuild. You have no insurance. What would stop you from walking away and telling bank the charred remains are theirs? How do they get their $700 K? You believe a company that hold do this?
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by madbrain »

anagram wrote: Tue Mar 05, 2024 4:43 pm Yes, I think it has to be a fault line. But $14K. :shock:
Yeah. It's a crazy price. I doubt many homeowners in my neighborhood can afford CEA premiums.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by madbrain »

LotsaGray wrote: Tue Mar 05, 2024 5:18 pm Yes you are required to carry insurance on property used as collateral. At least for real estate and cars. Your house burns to ground. You have $700K mortgage and it’s going to cost you $500 K to rebuild. You have no insurance. What would stop you from walking away and telling bank the charred remains are theirs? How do they get their $700 K? You believe a company that hold do this?
It can be a lot worse than that. Just tearing down the existing house can be a few hundred thousands.

And in some cases, the rebuilding cost, to the same standard, can exceed the market value of both lot + land together. That was the case for many years for us - we bought the house for $800k foreclosed 14 years ago, insurance estimate to rebuild was $1.8M.

Still, lenders do not require all-perils insurance. Flood insurance and earthquake insurance are not required for our home, for example. I believe lenders do take on some risk for those perils, at least if the loan is non-recourse. It's moot now because we no longer have a mortgage. We do have a HELOC though, that we haven't drawn from.
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Re: Is it Time to Self-Insure? CA Homeowners Rate Increases

Post by talzara »

fortunefavored wrote: Tue Mar 05, 2024 9:40 am As of August last year, USAA will not insure new customers in California unless their fire risk rating is 1 (On a scale of 1 to 32.)
geobrick wrote: Tue Mar 05, 2024 12:49 pm So that option is off the table though I may consider them for car insurance if I qualify with my wife's dad serving way back.
USAA filed this underwriting change in April 2023 to take effect in March 2024. However, it hasn't been approved yet by the California Department of Insurance, so it is not in effect yet.

If you qualify for USAA, you should get a quote while you still can.

August 2023 is when Matthew Kupfer of the San Francisco Standard noticed the change. He appears to be the only newspaper journalist in Northern California who reads insurance filings. He's not going to write an article to tell you that the filing has been pending for 11 months. He has a lot of other articles to write about homeowners insurance in California.
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