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FAQ to an Insurance Company Rep After the Fire

Aug 23, 2019

November, 2018

The Conejo Valley and Santa Monica Mountains just went through the most catastrophic fires in California History. The Woolsey Fire may have a lasting effect on the cost and availability of getting insurance in “High Fire Severity Areas”. asks a few questions of Andy Geeson, Geeson Insurance.

AHP: Are you able to write new policies in the burn areas?   

Andy: The carriers are slowly lifting their moratoriums now, so yes, we are now able to write new policies in many of the burn areas.

AHP: Do you know what long-term effects the fires may have on policies?  Rate increases, surcharge changes?  

Andy: Not exactly sure yet, but I’m assuming the obvious – that areas that were tough to insure before will be even more challenging, and that rates are not headed south.  Between Santa Rosa and Ventura last year, then Redding, Paradise, and our Woolsey fire this year, the carriers are taking tremendous claims losses in CA.  I am not expecting my job to get easier going forward, and I expect that homeowners insurance eligibility will be an even more key component of sales transactions going forward.  That all said, I think there will be companies still willing to insure, and over time, competition will drive the prices back to a reasonable level.  Heck, there’s not much left to burn around here for a while, right?

AHP: What is the diff between “replacement cost” coverage and “guaranteed replacement cost” coverage?  

Andy: Replacement cost coverage is an agreed-upon estimate of what it would cost to replace a home’s structure.  It is the limit stated as Coverage A on most homeowners policies.  If a policy provides guaranteed replacement cost, regardless of the coverage limit stated as Coverage A, the company guarantees that they will fully replace the home’s structure, regardless of cost.  Most GRP policies will require that the insurer do their appraisal after binding, and they reserve the right to then adjust (and charge appropriately for) their Coverage A limit.  If a home is properly insured, this feature should be fairly irrelevant, since most standard policies automatically provide extended coverage above and beyond the Cov A limit; From what I’ve seen extended

AHP: Are deductibles applied in a natural disaster – State/Federal Emergency or otherwise?  

Andy: Generally speaking, yes, absolutely.  Some carriers have chosen to waive the deductible on a Loss of Use only claim (hotel and meals while the insured is displaced during a mandatory evacuation), but generally, a deductible is coverage ranges from a minimum 10% (on State Farm’s policies) to a max of 100% on a Chubb policy.  NatGen Premier – a carrier we use often – provides GRP on any home with a coverage A limit of $750K or above.always applied.  Policyholders should expect this.

If you have any other questions for Andy,  please leave a comment!

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