On the way back from our trip into town we had time to talk in the car.
I had mentioned to my husband that my elderly friend, in the condos next to our development, told me that her HOA insurance fees quadrupled to $1100 per month to cover fire.
That’s my daughter‘s mortgage!
My husband mentioned that it’s probably because of all the insurance companies doubling down on fire insurance. He said, “you know we could ask our insurance provider to omit fire insurance because,
we don’t have a mortgage
we have enough money to rebuild
And they’re only going to continue to increase the costs.
they’re just getting money off of us”.
He said that we would continue with the earthquake insurance because it’s not very expensive but the fire insurance is getting ridiculous. Any ideas? Insurance people out there any ideas?
Your post has California as a tag, so I assume this is in CA. CA is having an insurance failure. One contributing factor is prop 103 restricts insurance from raising rates above a certain percentage without public hearing, and cost of replacement increased far above that percentage following the post-COVID housing bubble and cost increases. This led to CA home insurance being unprofitable or less profitable than elsewhere, so most of the big insurance companies either left the state or stopped issuing new policies. Around the same time, insurance companies also took a hit with wildfires, including the 2025 Palisades fire, which is estimated to be the most expensive wildfire in US history.
You mentioned this is a condo. The few remaining insurance companies issuing new policies in CA are often especially reluctant to touch large group policies like this, as the risk is too concentrated. Rather than covering 5% of homes in the neighborhood, they are covering the equivalent of 100% of homes in the neighborhood with a condo group policy. A fire hitting that particular neighborhood / condo complex would not bode well for the insurance company. I’ve heard of condos not being able to get any standard insurance at all for their complex , leading to expensive non-standard insurance and giant rate hikes, measured in 4-figures per month HOAs for their condo or huge special assessment fees.
However, for typical private homes in CA that are not located in high risk fire areas, fire is only a small contributing factor to the net insurance cost. One review found that external fires that do not originate within the home only compose 0.1% of home insurance claims, and all fires (both originating in and out of home) compose under 3% of home insurance claims. I am a home owner in CA. When I spoke with insurance agents about costs, I was told water damage was responsible for the largest portion of claims $… much larger than fire. Nevertheless, I’d certainly want my insurance to cover fire damage.
Can coverage for fire insurance be carved out from your policy ?
I suspect that the answer is no as all commercially available homeowners insurance policies need to be approved by each state’s insurance commissioner’s office (unless an individually written excess & surplus lines policy, but this wouldn’t be worth any agents or insurance company’s time to write an individual policy for just one homeowner).
We didn’t have an option. We’re in one of the areas that depended hugely on State Farm and they cancelled our entire zip code. We got CA fair for fire and I can’t remember the insurance term but another policy to cover the normal homeowners,but we needed the fire coverage first to do that as I recall. This is despite FireWise recognition etc.
a friend of mine lost her home in the palisades fire. It’s devastating.
I know our state congresswoman is working to get this fixed (iow allow market rates to work) and I think others are too but it sounds like it’s probably going to take a few years to get through.
A friend of mine has also lost her home in the Palisades (complete loss) and the out of pocket costs they’ve had (without seeing a dime of insurance money so far) is eyepopping. The lot needed to be cleared, the wreckage needed to be hauled away, what was left of the structures had to be demolished. Labor is scarce and the costs of everything are just enormous.
So OP- I’d have a sit down with your agent. Even if you can easily afford to rebuild, it’s not as straightforward as it seems. Builders know they can charge what they want; scavengers have moved in to “take the empty lot off your hands” at rock bottom prices, and what they thought was an easy decision (get the insurance money, rebuild, move back) is now complicated by the extensive timelines, enormous costs, and watching everyone in their neighborhood do the same dance. Find out exactly what your insurance covers, what hoops you need to jump through to collect, what will and would not be covered in a total loss, etc. Don’t cancel before you know exactly what you are already paying for.
We’re already paying a bundle more between CA fair + new coverage. They did some kind of survey and vast majority were on the side of pay more to get the fire coverage. Of course, that may vary by location.
Can I digress on the goats? We have them here too. Man, what a business model. Other people pay you to feed your livestock (Yes I know it’s not all year lol).
I did see a goatherd trying to stop some goats eating flowers rather than grass the other day!. They were leaning on a fence to get to the neighbor’s plants!
You aren’t moving- but where are you going if your home burns down and how long are you prepared to stay there while you figure out the logistics of rebuilding? I don’t live in a fire zone- I live adjacent to (but not actually in) a hurricane/flood zone. But every “this can only happen every 100 years flood” (which seems to be every few years now) reaffirms that we were right not to drop the voluntary part of the flood insurance. Neighbors from a few blocks away (inside the flood zone) got priced out of rebuilding.
I’ve had 3 insurance claims during my lifetime, with insurance paying a total of
between $100k and $200k across the 3 claims. All 3 related to water damage, orginating from within home. I also had other water damage events for which I did not file a claim. Across the full state of CA, non-weather water damage is by far the most common home insurance claim. Across the full US, including areas with harsher weather than typical coastal CA, the largest portion of claims relate to damage from storms, such as wind (particularly southeast) and hail (particularly midwest). Insurance covers many things beyond fire.
That said, I agree that one shouldn’t remove fire from their insurance. While fire claims are extremely uncommon for persons who don’t live in wildfire areas, on the rare occasions when they do happen they can be very expensive, sometimes a total loss. Not living in wildfire areas does not mean, there is no risk of fire. Across full US, the overwhelming portion of fires originate within the home, rather than from weather events. This differs from earthquakes. Unlike fires, earthquakes do not originate from within the home, so minimum risk level is much smaller than with fires.
Not because of fire but my dad’s insurance (he’s since passed) got ridiculous and he cancelled it all. The property was worth more than the house anyway.
We have enough to rebuild but I have paid a lot for insurance and intend to continue doing so. Being under covered for catastrophic loss when you can afford to seems penny-wise & pound foolish.
I am one of seven siblings, and minus 3 sibs, 4 sibs own big properties in different parts of the county. My BIL has a sister with 7 rentals. Or we can do AirB&b. We already have our contractor, who completed all of our baths, as well as our 1st floor remodel, and he responds well to cash. He said that we were good clients and would put us at the top of the list if we needed another remodel.
Your opinion is based upon your experience.
Our 30+ years of insurance charges with continuing escalation is making us rethink the situation.
One sibling moved OOS to have “easier issues” and now she wants to return to California. She’s been there 5 years and hates it. Can’t afford to come back.
(Yes I know it’s not all year lol).