Real Estate Round-Up: I is for insurance

I touched on the subject of insurance previously, when I addressed the positive impact that adding home hardening features to a property has on the insurability of the property. The topic of insurance demands a deeper dive because, in California, securing affordable homeowners’ insurance is not an easy task.

Insurance companies use the Federal Emergency Management Agency maps to evaluate the types of natural disasters that a property has the potential to experience. The FEMA maps address flood, potential flood zones, wildland fire zones, very high fire hazard zones, earthquake zones and seismic hazard zones. A Natural Hazard Disclosure Report is required on all properties that are conveyed in California. A third party prepares the report, which takes its data from the FEMA maps.

Insurance companies use this information to determine insurability. In Fallbrook, the most common area of concern is fire. Much of Fallbrook falls in one or both fire zones. Because of this, many insurance companies do not provide insurance coverage, or charge incredibly high premiums because of the risk.

The first fire zone is the Very High Fire Hazard Severity Zone. This fire area is defined as an area that has substantial fire risk due to location, slope or vegetation density, and weather conditions. The second fire zone is the Wildland Fire Area.

Insurance companies also review previous fire maps to determine the proximity of those fires to the structure they are considering insuring. As an additional layer, insurance providers take into consideration the preponderance of fires in the region and across California.

Because of the historically high number and size of the most recent fires across California, many former insurance providers have discontinued writing new policies. Some are even canceling current policies.

Fallbrook and Bonsall do not have overall positive ratings. Many of our homes are surrounded by protected shrubs and trees or have vegetation that does not provide enough distance between the vegetation and the structure.

I spoke to Victoria Cook, with Robert Bell Insurance, here in Fallbrook. She explained that insurance providers don’t want to insure property that have trees touching or near the structure. This is challenging when you consider that mature landscaping used to be a positive, due to the benefit of shading a structure. Picture a large oak tree shading that private courtyard.

Or the beautiful sycamores or liquid ambers that provide shade to an entire side of a home. The concern over fire now surpasses the desire for the cooling effect of a large shade tree. Clearance is now the number one priority.

There are other items to remember when it comes to insurability. If you have a pool, is it fenced? Does it have a diving board or a slide? Is your roof tiled or metal? And, how old is it? Is your home stucco, fire-resistant siding, or wood? Are

the eaves exposed, or are they boxed in? Are the rain gutters mesh covered? Do you have an interior sprinkler system? Where is the propane tank located in proximity to the home? How many and what kind of pets do you have? Two dogs

are ok, but three is one too many. Labradors, poodles, goldens, and small dogs are ok, but pitbulls and Rottweilers are not. Is the property well maintained?

Mobile homes, manufactured homes, and modular homes are a very tough go. Currently the California Fair Plan provides coverage for these structures, at an exceedingly high premium, but only covers the structure. The California Fair Plan does not provide coverage for your personal property.

Insurance providers evaluate not only the property and its condition and fire safe amenities, but also the history of any claims on the property and any claims on the individual purchasing the insurance. Any claims will cause the premium to be higher or for insurance to be denied. A new buyer will be saddled with a higher premium. The current claim also stays with the individual who filed the claim. So, when they purchase a new property, that previous claim will cause their new

insurance to be higher.

One more component of insurance coverage is the coverage for Accessory Dwelling Units used for rental. The property itself can get adequate insurance, but the liability provision is more problematic. Insurance providers do not want to receive a claim for injuries to short or long-term tenants when they are insuring a personal residence. It’s something to consider when you think about renting out your property.

Insurance is something we all need. It is something every lender requires. It is becoming more and more elusive. If you’re selling, if you’re buying, shop early for insurance and be prepared to pay more than you imagined. No matter the price or the terms, if you need it, you’ll be glad you have it.

Kim Murphy can be reached at [email protected] or 760-415-9292 or at 130 N Main Avenue, in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.