State Farm & Allstate won’t write new home policies in California

I think this is exactly why State Farm / Allstate / Chubb are gradually leaving the state, rather than some dramatic bulk non renewal. California can make your life hell as an insurer, even if you’re trying to leave, so better to do it gradually and let the CDI save face… and if they eventually get their act together you can start re-engaging… but it’s years now since the largest PL insurers in CA said they wouldn’t accept NB. I think it’s a little denialism to say they’re not leaving the state.

And now the big WF has finally arrived (which I think is more significant than a big EQ, since isn’t quake excluded from most/all CA property policies? Thanks to toxic regulation 30 years ago) and the FAIR plan will probably be out of cash so rob State Farm, Allstate, etc., which will just push them out the door faster.

Pulling a definition from Wikipedia (from some research paper):

Redlining is a discriminatory practice in which financial services are withheld from neighborhoods that have significant numbers of racial and ethnic minorities.

Pulling out of specifically wildfire-prone locations isn’t likely to be driven by racial and ethnic considerations? Of course the CDI is going to try to make it sound just as evil.

today’s WSJ says:
State regulators have prevented insurers from charging premiums commensurate with rising property values, construction costs and wildfire risk exacerbated by a warming climate. Many thus stopped renewing policies.

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Ah that’s good too then. In fairness to the WSJ i believe it was an article of their’s that pointed out CA was the only state in the country that didn’t allow the use of forward looking CAT models and thus didn’t allow the contemplation of climate change.

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I don’t think that the dilemma can be stated more succinctly than this.

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I’m wondering if you’d get a good ROI by updating to a modern furnace…

Furnaces are expensive, and modern furnaces don’t last as long as older ones. So even if i saved a lot on fuel, i doubt it.

I’m sort of hoping that if i wait a couple of years i could find a heat pump that would work with baseboard hot water heat. But maybe I’d do better buying a new gas furnace before they are outlawed. There are issues with getting a heat pump. And i certainly don’t want to burn expensive electricity to heat water with electric resistance.

Don’t heat pumps already work with baseboard hot water heat?

My main source of heat is baseboard electric heat. I’m looking at getting a heat pump. From my understanding, I run the heat pump 90-99% of the time and turn on the baseboard heaters when I need to supplement the heat during extreme cold. Is that not possible with your system?

Nope. Where do you live?

My heating system is designed to have water at 180F running through it, and that’s too big a temperature gradient for the current generation of heat pumps. Or so I’ve been told.

I understand that in Europe they have hot water radiator that are taller than mine and are designed to run at a lower temp. (The taller radiator gives more room to develop convection of air within the radiator.)

Older house?
I recall my grandmother’s house had those. Built sometime between 1900 and 1920 or so. No longer exists.
I think one part of my high school had them. (Other parts built later used the popular mechanisms of their days.) Still exists.

Hot water baseboard heat was the standard around here until AC became popular. It’s much cheaper to have a single system, so most houses built with AC have hot air heat. Except newer houses sometimes were built with mini-split systems. My house is poorly designed for a mini-split because i don’t have exterior wall space to put the unit on in many rooms. (There are windows or bookcase or cabinets in the way.)

State Farm seeking an emergency 22% rate hike to deal with capital deterioration from the wildfires.

Here is a gem from the LA Times article:
" In June, the company filed for a 30% rate increase for its homeowners polices, a 36% increase for condo owners and a 52% increase for renters. That request took state officials by surprise, with Lara saying it raised “serious questions about its financial condition.”"
It seems that as recently as June state regulators were still in denial about the state of insurance in CA. That might change now.

Quote from the LA Times link:

This watchdog group has considerable legal power in CA . . . and is half of the problem for the current situation faced by consumers in the state.

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Gonna guess they also have a stance like, “Don’t take CA insurance profits out of CA to pay for other states’ natural disasters.”

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Right, profits from other states are supposed to be propping up the state!

They already do, IIRC that was part of the recent announcements to changes in rating procedures that you could not use other states cat losses to justify losses in CA. (I am too lazy to scroll up to find the discussion)

Nice work policing all the fraud, regulators.

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I’ll add a bit of context for those who may not be familiar with some of the details being asked here.

A typical homeowner’s policy will have the premium generally determined by the replacement cost for the dwelling–often referred to as “Coverage A” and the technical term often used to describe what’s included in this amount is “real property” (think “real estate” for the use of the term “real”). So the settlement of a claim for real property is generally based on the actual cost incurred to repair or replace (as is the case for the wildfire claimants). For some insurers, a policy whose Coverage A amount is “close enough” to the estimated replacement cost of the dwelling are given a automatic extension of an additional 20% of their Coverage A limit in the event of a total loss.

Included in this cost is a percentage of Coverage A–typically 50%–to coverage losses to personal property. which is usually more than sufficient to account for any personal property–often referred to as “Coverage B”, and this is usually property that is easily removed from the location.

There is sometimes coverage offered for “unattached structures”–things like a detached garage, storage shed, gazebo, etc. The premium charged in the first paragraph above will also include a percentage of Coverage A–typically 20 to 25%–to cover these structures.

Typically, the settlement of claims for loss of personal property and unattached structures is done on an Actual Cash Value (ACV)–that is, the current value of the item–so it’s important to know what was lost and how old it was at the time of loss.

There are additional coverages that are also extended, but these are often limited to a fixed dollar amount (think a couple thousands of dollars in total), so we can ignore that for the most part.

The above “simplification” of the underwriting of a risk is to prevent the requirement of every customer to go through an “itemization” of contents to be covered. Rather, this takes place when a claim occurs. And has been this way for a very long time.

So the DOI making the ask they are, just because there’s a lot of people in a concentrated area needing to “jump through hoops” for their claims, is pretty preposterous and isn’t going to help the supply of insurance coverage going forward.

FWIW, I don’t see any reason that the insurance companies will pay out the Coverage A limits for a total loss of the dwelling (this is pretty obvious).

I can see the ask for insurance companies to settle the claims for the personal property at some fraction of the Coverage B limits (say 40% of that limit) and waive the need for presenting an itemized list.

But I don’t see any reason to settle claims for the unattached structures without some degree of itemizing the structures and their approximate dates.

Giving claimants 120% (or 140% if they qualify for that 20% extension described above) as a starting point should be more than enough to “alleviate the initial stress” of trying to recover (and this is in addition to the policy generally covering the cost of alternate living arrangements until the claim on the dwelling is settled).

But I don’t see there being the need to provide “full policy limits” for all coverages afforded by the policy for the policyholder’s lack of planning.

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