Tightening Insurance markets means tougher underwriting rules and higher rates. Most property insurance companies are losing money in California due to low interest rates, high claims and the California Department of insurance regulations and rate approvals.

1. POOR INVESTMENT RETURNS: Half of Insurance companies' profits come from investing your premiums before they pay out claims. The return on investment environment is poor on the low risk investments Insurance Companies typically use.

2. HIGHER THAN NORMAL CLAIMS: Brush Fires and other natural catastrophes have caused much higher claims #s than normal. The Lake, Butte and other wildfires all happened in a short period of time and showed the potential for larger than expected claims. The result is tougher Brush mapping rules. Once one company tightens, all others copy them.

3. ANTI BUSINESS REGULATORS: The California Department of Insurance has threatened to fine St, Farm $2.5 Billion for not implementing a DOI mandated 7% homeowners rate reduction fast enough. In 2014 St, Farm requested a rate increase of 6.9% because they had been losing money & had low reserves. After a 2 year fight the DOI refused the 6.9% increase and demanded a 7% rate decrease. It's hard to run a business when you cannot adjust your rates quickly up or down to meet current needs.
We expect less availability of insurance for 2017.
So plan ahead to avoid having insurance impact your escrow close.

Insurance by Allied Brokers has been solving insurance problems in Palo Alto for over 50 years. We look forward to working with you in the future.

Other topics for 2017 and beyond

1. FLOOD INSURANCE: The National Flood Insurance Program (NFIP) lost $1.9 Billion in 2016 and is now $24.6 Billion in debt. Congress is not happy. They are now allowing private companies to offer flood insurance. It is easier than ever to get private flood insurance to replace the old NFIP policies. If approved the premium is $860 vs. NFIP $2000. Better quality coverage and you don’t have to deal with the government for claims. Elevation Certificates are not required with private insurance.

2. EARTHQUAKE INSURANCE: We have a new earthquake market which is 25% less than our old markets and the CEA for most homes. It has better and more flexible coverages. 15% discount with proof of EQ retrofitting. Most policies have a maximum of $25,000 limit on Loss of Use/Rents. Next to rebuilding your home, paying for a place to stay for 2-3 years while you rebuild is the biggest EQ risk. We can add any amount, $200,000 only costs $400 a year.

3. CLAIMS HISTORY: C.L.U.E. Reports and claims history. Some companies like State Farm do not accept prior losses at the new home being purchased. Find out in advance if your listing or new offer has history of claims.

4. BRUSH HAZARD: All companies are now using brush fire mapping to disqualify homes in certain zip codes. Wood roofs, overhanging tree’s & homes on a slope are turned down in most zip codes. We are being forced to use nonstandard, more expensive companies for homes that used to pass. West of 280 and Emerald Hills are very tough. Plan ahead and call us for brush mapping.

5. LESS COMPETITION: Two of the largest companies, State Farm and Allstate, are both closed in many zip codes. Stanford, Los Altos, Portola Valley, Woodside and many others. With regulator forced rate reductions and big losses this area will increase.

6. AIRBNB, COC, VACANT: Occupancy matters it affects eligibility and coverage. If the policy is written as owner occupied but is in fact vacant, under construction, rented or used as an Airbnb. Then you can lose all or part of your coverage. The companies inspect your property within 60 days and check for occupancy. They will cancel policies if the occupancy is wrong. We have policies for all of these exposures to make sure your clients are covered.

7. INSURANCE FOR REAL ESTATE PROFESSIONALS: We provide workers compensation, professional and general liability for realtors. Most of these coverages are provided for you by your firm. But if have your own firm or you hire your own assistant, you need your own coverage. Your assistant and sub-contractors are your employees and you could be held liable if they are hurt on the job. To protect yourself make sure your sub-contractors have their own workers comp and liability coverages and name you as an additional insured on their policy. Many subs are not insured so having your own coverage is the only solution.

8. YOUR INSURANCE: The best way to understand how we work is to have us review your personal insurance. We insure many real estate professionals that refer us to their clients and we would be glad to provide references to attest to our high quality service.

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