Insurers continue to “not renew” (drop) customers. Homeowners increasingly choose self insurance (no insurance) over paying huge premiums, which are set to increase even more as California Fair Plan will receive $1B from California insurers, half of which can by law be passed onto customers. Warnings of housing price impacts due to rising insurance costs – in every state. Landlords should look at all risks with clear eyes and consider the alternatives carefully. Even Warren Buffet cashed out a year ago.
State regulators said Tuesday that they will allow the program, known as the FAIR Plan, to collect $1 billion from private insurance companies doing business in California to pay its claims. That is likely to drive up insurance costs for homeowners across the state.
As private insurers reduce their business in California, more homeowners are being pushed into the FAIR Plan, which was designed as a plan of last resort but is increasingly covering more and more homeowners. Between 2020 and 2024, the number of homes with policies under the FAIR Plan more than doubled to almost half a million properties with a value of about half a trillion dollars. Many of those homes were in the area devastated by the Palisades fire.
As of Feb. 4, the plan had received more than 3,400 claims from the Palisades fire, and more than 1,300 claims from the Eaton fire. About 45 percent of those claims were for “total losses” — homes that were completely destroyed.
(2022 data) Cancellation rates were highest in coastal areas in the Carolinas, including Hilton Head, Charleston and Myrtle Beach, which are especially exposed to hurricanes. They were also high in parts of West Virginia, Arizona and California.
As for cases where insurance companies refused to renew policies even for their paying customers, those nonrenewal rates were also higher, and grew faster, in high-risk areas. The ZIP codes with the greatest share of nonrenewals in 2022 were in coastal South Carolina as well as parts of California, including in Sonoma County and Yuba County, which have been hit by wildfires. Areas of Tennessee that have suffered severe storms also saw high nonrenewals.
(2023 data from the Federal Insurance Office) Senator Sheldon Whitehouse, Democrat of Rhode Island and the committee’s chairman, said the new information was crucial. In an interview, he called the new data as good an indicator as any “for predicting the likelihood and timing of a significant, systemic economic crash,” as disruption in the insurance market spreads to property values.
(Jan 2025) The Treasury Department’s Federal Insurance Office is preparing to release a first-of-its-kind report showing neighborhoods that are vulnerable to climate impacts and how they face rising insurance costs.
Yet, Nine Republican state insurance commissioners say the report “risks misleading the public” and want the insurance office eliminated, from their appeal to Elon Musk and Vivek Ramaswamy on Dec. 20 2024.
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