Home insurance is getting more expensive. Agents help buyers check prices first

In the affluent suburb of Woodside nestled in the hills of Silicon Valley, potential homebuyers are finding themselves at a crossroads, largely due to skyrocketing homeowner’s insurance premiums. Some real estate agents are stepping in as insurance consultants to help buyers navigate this complex landscape by preemptively researching insurance costs for properties of interest.

According to a report from the San Jose Mercury News, Cara Gamble, an agent with The Agency in Danville, is proactively assisting potential buyers by checking insurance prices before they make an offer. “I want to ensure that they can afford the insurance on top of the mortgage,” she explained. In recent cases, she noted that several buyers chose not to submit offers after discovering that insurance costs were prohibitively high.

Scott Hayes, a real estate agent in Woodside, has observed a noticeable decrease in showings over the past year. Many buyers have realized that in areas prone to wildfires, their only option is the costly FAIR Plan, which is set by the state and underwritten by private insurance companies. He commented, “If you want to live in this desirable area, you have to accept these insurance rates; there’s no alternative.”

The situation is compounded by private insurance companies sending out non-renewal notices to numerous homeowners across California—causing the number of policies under the FAIR Plan to surge from 126,709 to 350,000 today. Hayes emphasized that the unpredictability of insurance costs significantly impacts people’s willingness to purchase homes. “Some feel there’s no point in looking for houses if they can’t afford insurance,” he noted.

So far, none of Hayes’ clients have backed out of contracts due to insurance issues, as he has already helped them verify FAIR Plan rates. For a $2 million house in Woodside, insurance premiums can range between $15,000 to $20,000 a year.

Despite these challenges, homes in the Bay Area remain in high demand, leading buyers to hesitate in exercising cancellation clauses that might exclude them from consideration by sellers. Melody Johnson, another agent with The Agency in Danville, keeps a list of insurance companies that are still writing homeowner’s policies right on her desk, ready to inquire about prices for her clients at a moment’s notice.

Johnson pointed out that while many well-known large insurance companies have ceased writing new policies, smaller, lesser-known firms have stepped up to fill the gap. “It’s a mixed bag now; some of these companies have names you’ve probably never heard of,” she remarked.