We do not exaggerate when we tell you that the California property/casualty insurance market is in disarray. You might have heard the recent news that State Farm pulled out of the California property market. With 20% market share, a company of this size refusing to write new property business puts pressure on an already difficult market.
Many other insurance carriers are tightening up their underwriting and are placing restrictions on new business, even on rewrites in the event of expiration due to late payments. California could become much like Florida, where your only property coverage choices may be a limited number of non-admitted carriers, and the California FAIR Plan may be your only, and very expensive option.
This is an ongoing, urgent situation that affects all of our clients, no matter what types of policies you have with us. Here’s what you need to know right now:
1 Do not allow any of your policies to lapse under ANY circumstances. This is of great concern for property policies, but we are starting to see underwriting blocks on auto policies as well. Many of the carriers will no longer take new auto or lapsed auto policies without a 10-20 day underwriting block requiring multiple types of proof to even consider the risk. Pay your premiums on time, preferably early, as any type of policy may be difficult to rewrite if it expires. A policy renewing on January 1, for example, actually expires at the stroke of midnight, so make your payment BEFORE January 1!
We urge you to enroll all of your policies in autopay with a checking account, and always open all mail and email from your carrier and from our agency promptly. If your home insurance is impounded, set an alarm in your calendar 30 days prior to expiration and check with your lender to make sure they have sent your premium to the carrier. You can also bookmark the “Pay your bill” option in the upper right corner of our home page: Alive Insurance
2 Be extremely cautious with the filing of claims for any of your policies. If your property policy, for example, is non-renewed due to a claim(s), we may not be able to secure affordable insurance for you. Keep your deductibles as high as you can, only file claims in catastrophic situations, and pay out of pocket for anything else. We understand that this is frustrating, as it feels like insurance should be there for you no matter the size of a claim, but we are in an unprecedented time. Please call us if you're not sure if you should file a claim, and we will advise you.
3 Expect your premiums to continue to increase. We predicted in past blog posts that: Homeowner rate increases and Auto rate increases were coming, and why it would happen. Since then, we have continued to see the California property/casualty market suffer. Your premiums may already seem high, but they are actually not where they should be based on the massive losses in California, and increased construction and reinsurance costs. Other states with natural disasters have seen increases in premiums upwards of 49%-90%. The reason we have not yet seen increases that extreme in California is because our Department of Insurance has very strict limitations on rate increases and only allows modest increases every few years. While this is designed to protect the consumer, it has unfortunately created the opposite effect, resulting in the extreme limitations we are now seeing. As our choices become more limited, the focus will be less about finding the best price, and more about just trying to get coverage at all.
We strongly recommend you take our advice above: pay your bill, be cautious about claims, and don't be surprised to see higher than normal premium increases in the long term. A great time to talk more about your policies is when we call you for your policy review. In the meantime, Contact Us if you have any questions.