February 24, 2025

Got Insurance Problems – We Got Solutions

The crazy California Insurance market Crisis is leaving hundreds of thousands of consumers left with few good home insurance options. The High Premiums and Low Coverages are a Real California Challenge, that is the bad news. The Good News is that Marindependent has insurance solutions.

Confused by what to do when you receive that renewal?

Want to learn more about the FAIR plan?

Considering nonadmitted Options?

We Review the Two Path California Home Insurance Solution.

It should be noted that these solutions are not for those that currently have an admitted insurance policy. In many instances a nonadmitted option should only be offered up upon a nonrenewal and three declinations from admitted insurers.

The California Insurance Crisis – Very Briefly:

Wildfires and Inflation have left most home insurers to either leave the state or stop accepting new insurance applications. The list of insurers that have left the stae are many: Guard, AIG, Etc. The list of insurers not writing new home policies is very large. At least one insurer went insolvent – Merced Causaulty. Some insurerers have had their Financial Strength Rating downgraded. To top all of that off since so few insurers are writing more folks are going to the insurer of last resort – the California FAIR plan. AND the state of California has onerous regulations if insurers want to raise premiums.

That is the problem.

Now – When you Get Nonrenewed – What do you Do?

What is the Solution to a California Home Nonrenewal?

Step One if you do get a home nonrenewal – see if your insurer will still keep you. In other words try and keep that insurance policy. Some nonrenewal are based on inspections, many are not. If its based on an inspection and there is something to fix – fix it, and communicate frequently with that insurer. Even if the insurance cancellation is not due to an inspection, I would still call them. Plead your case.

Step Two: [Assuming you fail at Step One]: Shop Admitted Insurers that are still writing.

For Renters and Condo Unit Owners: Try Farmers Insurance and Amica.

For Homeowners and Landlord Policies: Try AAA and we have a few as well.

Assuming you fail at steps one and two – progresss onto Step Three Here.

Step Three is to Shop with Nonadmitted and or FAIR/DIC Companion options:

How to Shop for Home Insurance Once no Admitted Insurers will Take You:

Once no admitted insurers are willing to write your property – you may [if you are lucky] have a two path solution. For some, you may only have one path. The Two Paths are the California FAIR plan combined with a DIC Companion policy OR a Nonadmitted All in One Insurer. [It is not always quite so neat and tidy as sometimes the DIC Companion insurer is a nonadmitted solution.]

The Nonadmitted Path:

Nonadmitted Insurance, also called Surplus Lines Insurance is simply insurance that is not ruled and regulated by the home state’s department of insurance. In the case of California – then the home insurer is not regulated by the California DOI. Often these policies look and feel similar to regular home insurance policies – however with some key differences. These home insurers are NOT backed up by thte State Guarantee fund. The most common nonadmitted insurer that folks have heard of – is Lloyds of London. Lloyds is NOT by any means the only insurer writing in this space: Scottsdale, Homesite, MSI, Evanston – there are lots of options.

In this insurance crisis – nonadmitted insurers remain an incredible option for Californians. One policy, One Premium, One Deductible, One Post Bind Inspection. When you purchase a nonadmitted insurance policy there is more paperwork, including the state mandated D1. Additionally typically the fees and taxes are listed out on the quote.

The FAIR and DIC / Companion Path:

The California FAIR plan is the insurer of last resort, and for good reason. On this blog, we have discussed the FAIR plan on multiple occassions. Basically the FAIR plan is a limited policy that covers you for fire, windstorm, and a few other perils. Together with the FAIR plan you should pick up a DIC Companion Policy. This DIC Companion policy rounds out the FAIR plan and gives you additional coverages that the FAIR does not provide that a typical homeowners policy would. This DIC Companion policy provides you with several coverage including Theft, Limited Internal Water Damage, and Liability.

The FAIR Companion Path can also be a solid option for insureds during this California Crisis. Two Policies, Two Premiums, Two Deductibles, Two Post Bind Inspections.

Are these two Options Intended to be an Insurance Policy Forever?

No. Neither of these two options should be thought of as forever insurers for most consumers. Typically its a plan for now, with the hope that things will get better. For some more unusual properties one or both of these might just be the type of policy you have moving forward.

Which is Better? FAIR or Nonadmitted?

A lot of publications are going to tell you that one is better than the other. I am going to share with you that becuase its a case by case basis. It totally depends on the situation. If you are Lucky – you would have options from both. If you are someone lucky you will have options from just One. If you unlucky you will not have options from either. [And no the FAIR plan does NOT have to take every risk.]

Which is better is based on the coverages offered up, the premium, the turn around time, the Financial Strength Rating, and other underwriting factors.

What Tilts the Direction to the FAIR or a Nonadmited?

There are sometimes things that tilt the decision towards one vs the other, and here are a few:

Premium: If one premium is three times the cost of the other… you might have your decision.
Exclusions: Some offers will come with more limited coverage than others.
Broader Coverage: Similar, yet different than above – Some offers will come with wider coverage.
Total Insurance Value: The California FAIR plan has a limit of $3.0MM in TIV.
Capacity: Some nonadmitted insurers run out of availability occassionally.
Time Constraints: Occassionally the FAIR plan or Nonadmitted provides an actionable quote faster.
System Processing: This seems like a silly reason, but lately it has been a real consideration.
Financial Strength Rating: Why wouldn’t you buy a much higher rated insurer?
Insurance Political Opinions: I do not suggest this, but frequently Consumers have leanings.

*this is not inteded to be a complete list.

Tips When Choosing

Don’t let the tail wag the dog: A lot of folks make insurance decisions for the wrong reason. Perhaps they are more focused on simply making the bank happy. Focus in on what is important to you and your family.

Look beyond the Premium: Yes the premium is important, and in some cases running into the tens of thousands of dollars – I totally get it. However the premium is NOT the only number on the quotation. If and when you home burns down, the premium is not really going to matter all that much.

Start asking yourself what you really want to spend money insuring: Both of these solutions allow you to lower coverages, in general, for things that you might not need to insurer. As opposed to admitted insurers – lots of these options allow you cut coverage here and increase it elsewhere. Dont have that much personal property – then how about just $200,000? Do you really want to insure your fence? For the record if you understood typical fence coverage, my guess is that you would laugh and say no thank you.

Ask if its Time to Self Insure: [Editors note here: I HATE the term self insurance. If you choose to not insure – you will have no insurance policy. ] But just because I dislike the idea of what I would call “Not Insuring” doesn’t mean that its a bad idea. Have a 40 year old gazebo in your back yard that you would never rebuild? Why insure it?

Stop Calling Multiple Brokers: In years past I had suggested that you reach out to two different insurance brokers. Stop doing that. Frankly the market is so overloaded, capactiy tight, that you risk alientating a broker if they submit a quote request for you – only to be told that some other broker has already submitted one. There is a lesson here for consumers – when a broker asks you – who else has worked on this – fess up. Many NonAdmitted General Agencies will only accept one application from one broker at a time. [When I say Brokers I am talking about True Independent Agencies.]

Its Not a Forever Policy: Lots of these insurance offers and options are by no means intended as being forever. They are what is available now. Everyone hopes that things return to a new normal.

Consult Your Umbrella Insurer: Lots of Bay Area folks a significant net worth and a personal umbrella to protect it. Your personal umbrella insurer likely has requirements of your future home insurer. Be aware of those requirements or be preparted to change personal umbrella insurers. Key things to understand does your PUP take nonadmitted insureds and what is the FSR required?

Find a Broker you Like: Fit sometimes can be everything. Find someone you trust and ask them lots of questions. Marindependent is certainly not everyone’s cup of tea.

Why Sometimes the Two Path Home Insurance Solution is not all this Simple:

For lots of consumers, the problem really is this simple. But for others sometimes all of these solutions come together. There are certainly properties out there that have a Nonadmitted DIC/Companion with the California FAIR plan. Or properties that have a Nonadmitted Excess Property Policy over and above the FAIR plan and an Admitted DIC/Companion Policy. Now and again, due to systems in the house – the best we are able to source are a FAIR plan and pure liability policy [called a CPL] with no DIC/Companion option. However for lots of regular situations in today’s insurance market – the two path solution should work.

Summation of Got Insurance Problems – We Got Solutions:

There is currently a lot of chaos in the California Insurance Market. Especially with home insurance. There are two really good temporary solutions out there. The insurer of last resort – the FAIR plan combined with a Companion DIC policy OR a all in one Nonadmitted insurer. Check out your options if and when you get non renewed. The two path California home solution works for lots of citizens.

Disclaimer: Always speak with a licensed agent in your jurisdiction and and when you wish to change, alter, cancel, or start an insurance policy. Or even if you are considering NOT getting an insurance policy. Exclusions and Sublimits exist on all policies. Read your own insurance policy.