A Lesson about Hazard Insurance in California

Mortgage and Lending with WealthWise Mortgage Planning, a Division of American Pacific Mortgage Corporation NMLS #1850 NMLS 244226

california homeowners insurance

A Lesson about Hazard Insurance in California

If you’re a home buyer getting some quotes for hazard insurance, you look for the lowest possible insurance premium, right?

I used to think so until I got a thorough insurance lesson from a very smart Sacramento insurance agent. A miscalculation on hazard insurance could end up being a BIG and unpleasant surprise in a much higher than expected annual premium to the homebuyer to get the actual coverage they need.

Forego the increase and a homeowner is in a precarious place of not having enough coverage. Here are some special items to consider when shopping for insurance: Be sure to ask your insurance agent what their policy is for “loss of use” coverage. This is to help replace the loss of use of the home that has sustained damage and is unlivable for a period of up to one year. What would it cost to get a suitable home until the repairs are made?

Check policy coverage for “building code and ordinance upgrades”. If an older home sustains damage, local codes or ordinances may require “upgrades” (for compliance with code or ordinances changes after the home was originally built) during the repair. The insurance policy may not cover these “upgrades” or they’ll only cover a small percentage of them. Make sure you ask your insurance agent about this when deciding on what kind of coverage is adequate. You might be surprised at which companies cover 100% building code and ordinance upgrades and the ones that don’t. I know I was!

If the home is located in a rural area you might want to check with the local Fire Chief and find out what “protection class” the home is in. If the home is located five miles from the nearest Fire Station and there is no fire hydrant near the home, this is a protection class 8, 9, or 10 and will increase your premium dramatically. While you’re at it, find out if the nearest Fire Station has a paid or volunteer staff. This is also a major factor in the annual premium you’ll pay.

Be knowledgeable when shopping for California homeowners insurance!

Related Post:

Shopping for a Hazard Insurance Policy

Comments (6)

Eddie Matthew
Zenith Realty - Perry Hall, MD


Good information.  A house is a big investment so we should adequately protect it.

Dec 07, 2009 07:03 AM
Ron Trzcinski, 410-935-5844
410-935-5844 Office - Cockeysville, MD


Thank you for the post.  I guess if someone wants to shop around for a loan, then they should understand which costs you can control and which ones that you can not control.  In this case, you are obvioulsy looking out for the customer.

Dec 07, 2009 07:06 AM
Ed Gillespie
WealthWise Mortgage Planning, a Division of American Pacific Mortgage Corporation NMLS #1850 - Folsom, CA

Eddie - Thanks for your comments.  I'm beginning to see that a lot of home owners are "underprotected" just to save a few bucks.  If the loan officer are assisting their client in obtaining quotes they should also explain what affects insurance premiums and why it would be in their best interest to have the best coverage and not the lowest monthly premium. I think this will show the buyer that his or her loan officer is really going the extra mile to provide world class service!

Ron - Thanks for your reply!  It think the extra effort by the loan officer shows that he or she is truly giving their client a much higher level of service than the average LO.

Dec 07, 2009 07:35 AM
John Thomas
E3 Green HOMES - Boulder, CO
EcoBroker, MSEE, MBA

Very good points Ed...Thank you. Insurance is one of those areas that is easily overlooked and/or misunderstood.

Dec 08, 2009 11:12 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Excellent advice Ed!  The lowest premium won't alays translate to actual savings, if the insurance carrier has a reputation for not paying claims.  Using the "lowest premium" as an incentive for purchasing coverage can have the same outcome as using the contractor with the lowest bid to build your home.  You might end up with shoddy craftsmanship!

Dec 08, 2009 11:52 AM
Ed Gillespie
WealthWise Mortgage Planning, a Division of American Pacific Mortgage Corporation NMLS #1850 - Folsom, CA

John, thanks! and yes!  I've learned a lot and continue to learn in an effort to offer my customers the best possible service.

Myrl, thanks for your reply!  The old adage holds true "you get what you pay for"

Dec 08, 2009 03:57 PM