The Big Picture: Some insurers have stopped offering new homeowner policies in places prone to climate change-related disasters, like California, where deadly wildfires burned thousands of acres across LA county. State Farm stopped issuing new fire insurance or liability property insurance policies in late 2023 for properties in  CA.

By the Numbers: In Los Angeles County, 1.43% of policies were not renewed, compared with 0.86% five years earlier. Los Angeles County is currently under a moratorium where no carrier outside of California Fair Plan is offering new business (Department of Insurance wraparound policies may be available). In the State of CA, 2% of State Farm Insurance policies were not renewed last year.

What can you do: CA Fair plan is still holding strong and accepting new business in California including Los Angeles & Ventura County. This is a great option for people in need of insurance for escrow closings and can shop alternatives later once the fires are 100% contained. The max coverage is $3 million irrespective of replacement cost.

Properties held in trust: Some insurance claims are in dispute of being covered or have been denied because the Title is held in Trust, whereas the Insurance was under the individual homeowner's name. As a reminder, check your policy and communicate with your insurance provider to see if you need to add the Trust as an additional insured.

Why it matters: Getting a mortgage without home insurance is almost impossible. Shopping for home insurance prior to placing an offer is highly recommended. Housing is still a good bet as people still move to disaster-prone areas, while others can't afford to leave.

Courtesy of Risha Kilaru of OriginPoint, Compass’s lending partner.