You mentioned your friend in the condo had a large HOA increase due to the condo’s fire insurance. As mentioned in my earlier post, condos are far more susceptible to fire related insurance issues than single family home owners due to risk concentration. If you can get insurance with one of the standard private party insurers, rather than the state run CA FAIR or similar, then you likely have a different situation than the condo. I don’t doubt that your insurance premium has increased significantly since the post-COVID housing bubble, but that doesn’t mean fire coverage is the primary reason for your recent premium increase. In most areas of CA, I expect recent premium increases have more to do with rapidly increasing cost of replacement and reduced competition, with insurers leaving the state, forcing many home owners to switch policies.
Even if fire coverage does make up a large portion of your insurance premium, I haven’t heard of a standard single family home insurer allowing a la carte coverage selection for the 3 major perils, such as remove fire coverage, while keeping water and wind/hail. A custom policy might be possible via self insurance or a special manuscript policy, but both are likely to be expensive… more than you are paying now. An alternative option to remove fire coverage would be to go without home insurance altogether. Assuming you own a single family home, without mortgage or lease, it would likely be easy to cancel your home insurance. This touches on what is your reason for wanting to have insurance?
I get insurance for two reasons. One reason is to protect against unlikely situations that would be problematic for me. This could be financially problematic or problematic in other ways, such as causing a severe disruption in my life. My home burning down would certainly qualify, which is one reason I want to have home insurance. Given that my priority is protecting against major losses, rather than covering minor damage, I can keep insurance rates down by having a very high deductible, as well as other available policy option selections. I also was careful in selecting my insurer. My policy renewed yesterday. Before paying, I called them and asked about options to reduce rates. They reduced rate by 10% without changing policy due to finding a new discount that I qualified for. They also mentioned other discounts that I may pursue, such as a 15% discount for adding an automated water shutoff when leak detected.
I also live in a region of CA that was not far from the 2003 and 2007 fires. White ashes fell from the sky, but none of the nearby houses were burned. The condo that is ~1 mile away recently had a $4k special assessment fee related to fire coverage. Their insurer dropped the condo, and the condo was not able to get standard insurance coverage through other insurers. I was able to keep home insurance for my single family home through my existing insurer, so my insurance rates had a much smaller increase than the condo… roughly tracking the large increase in my home value that occurred post-COVID. My annual premium is still ~0.1% of my home value, roughly the same ratio as pre-COVID.
