Major Insurer Exit Deepens California Home Insurance crisis
SACRAMENTO, CA – California homeowners face increasing difficulty securingโค and โขaffording home insurance as more companies retreat โfrom the state due to wildfire risk.โ The latest development comes wiht the announced departure of tokio Marine’sโค subsidiaries, shifting their focus to commercial insurance, and Crestbrook Insurance,โ a Nationwide affiliate specializing in high-value homes, beginning to non-renew policies in June, offering customers a transition to surplus lines carriers.
The โescalating situation underscores a growing trend impactingโ theโ California housing market. Recent โdata from Realtor.com โreveals that climate-related threats, especially wildfires, now endanger 5.6% ofโฃ U.S.homes,โข representing $3.2 trillion in property value. A meaningful โฃportion – nearly 40% โฃ- of thisโค risk,โข or $1.8 trillion in property, is concentratedโข in California.
California law mandates insurance companies โprovide homeowners with 75 days’ notice before policy cancellation. Though, a completeโฃ insurer exit typically unfolds โขover approximately one year โasโข existing policiesโ reachโค their renewal dates. โA state ofโข emergency declaration by the governor offers temporary relief, preventing insurers โฃfrom dropping coverageโ for affected customers for up to two years.
The rising cost andโค limited availability of โhome โinsurance are โคalready disrupting California’s mortgage market. Damonโ Germanides,co-founder and broker at Insignia Mortgage,explained to Mortgage Professional America โค that unexpectedly high insurance quotes are increasingly jeopardizing โขloan approvals.
“We get on it early on โฃin the โloan process because we don’t โwant โthe client to โhave sticker shock when they get their insurance quote, or it could jeopardize the loan because the traditional underwriting matrix for insurance doesn’t work anymore,” Germanides said. “In [certain] areas, they’re five times higher, sometimes, than what you’d expect.”
The situation highlights the challenges facing โฃCalifornia homeowners and the broader real estate market as climate change continues to drive up insurance costs and limit coverage โคoptions.