What Is High-Risk Home Insurance, and Who Needs It in California?

homes in neighborhood in california

Have you heard of high-risk car insurance? High-risk home insurance is similar. In both cases, the insurance company’s underwriters have determined that the odds of losing money if they insure a certain person are elevated, so they charge more in premiums to mitigate that risk. 

So, what causes this pricey form of homeowners insurance coverage? What puts some people at a higher level of risk, which in turn increases their insurance rates? 

You could divide the risk into two categories. One has to do with risks associated with the property and the other with the personal history or circumstances of the applicant. 

Let’s look closer at both categories of risk. 

Why Some California Properties Can Only Be Insured Through High-Risk Coverage 

The high-risk designation is sometimes made based on one or more failings or concerns regarding the property. These factors can make the insurer predict that there could be excessive claims in the immediate future. Here are some of those factors. 

The Property Isn’t a Full-Time Residence in California 

Thinking of buying a vacation home that you’ll only visit a few weeks a year? Sounds like fun, but your insurer will likely see the potential for trouble. If you’re not present most of the time, the property could easily be burglarized or vandalized. Plus, you might totally miss problems such as the furnace failing, for example, leading to frozen and burst water pipes and lots of damage before you become aware of what happened. 

The insurer might also suspect that your absence will lead to poor maintenance and disrepair that could eventually turn costly. 

The Home Is in Poor Condition or Hasn’t Been Well Maintained 

If your insurer suspects that your not-so-new home has a dangerous electrical system, a leaky roof, structural problems, or other serious issues, the underwriter might see expensive claims in the future. 

The solution might be to write needed repairs into the sales agreement, assuring your insurer that the work will be done by the time you move in. 

The Home Has Been at the Center of Numerous Homeowners Claims in California 

Even though you obviously didn’t make those prior claims, the insurer might suspect that the fault lies with the property, and the excessive claim activity will continue even under new ownership. 

If you have a history with the insurer regarding another property in which you didn’t make excessive claims, this might be enough to convince the insurer that this won’t be an ongoing problem. 

homeowners insurance policy document

California’s History of Damaging Local Weather Conditions May Cause Home Insurance Rates to be High 

If you live in a part of the country like California, where wildfires, flooding, or other damaging weather mishaps are common, this could also lead to your home falling under high-risk coverage. 

Key Reasons Some Applicants Can Only Buy High-Risk Homeowners Insurance in California 

Sometimes the property isn’t at fault at all. Instead, the insurance company underwriter has found information pertaining to the prospective policyholder that puts him or her in a high-risk category. Here are some of those reasons. 

The Applicant Has a History of Multiple Insurance Claims 

California applicants who have filed multiple claims on prior home insurance policies over short time periods might find it difficult to obtain traditional coverage. That’s because the insurer might feel that this pattern of activity will continue and prove costly, so it adjusts premiums accordingly. 

Keep in mind, it’s the frequency of past claims rather than the total dollar amount that stands out. Your insurer is likely to feel less suspicious of a single $5,000 claim than of two separate $2,500 claims at different times within a year and for different reasons. 

There’s a Poor Credit Record or Criminal Background Involved 

Serious financial problems on the part of the applicant might be seen as motivation to submit questionable claims in the future. Similarly, a criminal record might scare an insurer away. 

Know Your High-Risk Homeowners Insurance Profile in California 

If you know why you’re being profiled as a high-risk coverage applicant, you might be able to do something about it. Ask questions, and scope out your alternatives. 

This is critical since California has the second-highest median cost for a home in the United States (after Hawaii). Therefore, you have a big enough challenge affording a new home in the state. It’s imperative that you try to make your homeowners insurance as affordable as possible. 

Find Affordable Home Insurance Quotes in California Today 

Don’t pay for high-risk California homeowners insurance coverage before talking with your independent Cost-U-Less Insurance agent. We’ll do all we can to shop for competitive rates and find you cheap home insurance. Call us at (800) 390-4071 or get a quick online quote for home insurance. You can also find a Cost-U-Less location near you