California is facing an insurance market crisis. Insurance carriers are making swift exits out of California, with State Farm and Allstate no longer writing new home policies. Auto is getting stricter in California, and it’s likely that many carriers will soon exit or pause accepting new customers.
Because insurance companies are privately owned, they consider the ease of doing business in every state before entering the market. For insurance, this could include rating new products, altering current products, increasing and decreasing rates, and how long it takes for changes to become effective. California’s insurance market is ranked as the second hardest state for doing business, meaning that insurance carriers don’t have strong incentive to stay in the market when things get tough.
Why is the California market tough, and why are the insurance strings getting tighter? In California, there’s a high disaster risk, primarily due to wildfires. Inflation and increased costs for construction and car parts directly relate back to the issue. Lastly, in California, the Insurance Commissioner is an elected position, which can have a strong impact on the insurance market.
This leaves consumers wondering what they can do in such a hard market. We’ve compiled some tips and advice to make sure you stay covered amidst the hard market.
For People Buying a Home:
- Shop early and shop around. Look at insurance as early as when you get preapproved for a home loan.
- If there’s a home you are strongly considering, know the home’s risk – look at a hazard map (fire and flood zone maps) to see if the home is going to be difficult or expensive to insure.
- Don’t put in an offer until you know what the insurance is going to look like for the home.
- Get your quote in writing and be aware of when the quote expires.
For People Buying a Car:
- Shop early and shop around for insurance before purchasing a car.
- Get an insurance quote before committing to a car to make sure the premium will not make the monthly payments unaffordable.
- If you’re adding a car, ask how long you’ll need to wait before being insured.
- Ask if there is a waiting period for the insurance.
- Do not drop insurance before registering a car to find a quote.
- Ask for detailed information regarding the payment due dates.
- If you’re a good driver and denied or dropped from your insurance, file a complaint with the state Department of Insurance.
Keeping Your Coverage Is Crucial:
- Do NOT let your insurance lapse.
- Do not be late on your bill.
- Do not drop your insurance because of an increase. You could be required to get a home inspection resulting in costly repairs and no insurance.
- Ask your agent early about renewals and what to expect in terms of costs, inspections and new carriers.
If you get a non-renewal notice, dropped by a carrier or cannot get insurance:
- Start looking for insurance immediately.
- Call your agent and your insurance company – ask why and if it’s fixable.
- Request things in writing – insurance companies are required by law to give a valid reason in writing.
- If it’s not justified or if the company dropped you despite costly repairs, file a complaint with the Department of Insurance.
Remember that an independent agent is a trusted advisor that works for you, not any specific carrier. Independent agents can present policies from a variety of carriers and shop around to find you the best coverage and prices for your needs. When the insurance waters get tricky, an independent agent can be more important than ever.
If you have questions, concerns, or want to get ahead of your renewal, give us a call or text us at (360) 514-9550. We are here to be a resource to you.