I live in California in one of the highest fire risk factors and many of my neighbors have had their insurance cancelled with the only option something called "California Fair" Insurance that costs many times more than they were paying private insurance for and without nearly the level of coverage.
My home was completely destroyed in a fire in 2006. Our insurance company fully paid off, no problems, including all our cars, motorcycle, boat, RV, and they continue to be our insurance company today. My home is market appraised in the $800,000 range and I currently pay $2,760 a year for the homeowner insurance which included $500,000 liability so I can buy an umbrella policy to make it $1M. My deductible is $1,000.
I just checked on line and my rate will increase in November to $3,175 a year. That is a 15% increase.
When sizing your policy, bear in mind you do not want to insure for the market value of the house. Instead you want to insure for what it would cost to replace the house in a disaster. In our case, I spent well over $100,000 in clean-up and disposal fees after our fire. Everything has to be recycled, from the concrete foundation to the steel appliances. Each has to be separated out, placed into bins and hauled away. We lost over 50 fully mature oaks and pines that all had to be cut, the stumps pulled, the soil recompacted before we could start rebuilding.
Make sure your policy covers complete replacement costs, not just what the home value is.
Also consider the policy covers 'loss-of-use', which is essentially rent on everything you owned until you are back into your home. Not just a rental, but all furnishings down to the last fork and spoon in the drawer is covered. This amount doesn't have a dollar limit and is time limited to 24 months. The cost doesn't come out of the pot of money to rebuild your home. The policy also covers all improvements on the property; fencing, walkways, decks, etc. It covers all landscaping too. In our case, even the septic tank and leach field were destroyed. When the tree stumps were removed, the septic and leach field were lost. The policy also covers all personal property. Ours pays up to 70% of the home value towards personal property loss. Meaning that for every $100,000 in home coverage, we have $70,000 in personal property coverage. That is a BIG deal when considering the cost of insurance. A home insured for $500,000 could pay out that plus 20% additional for landscaping, 10% additional for other improvements, and 70% for personal property/contents. That doubles the home's insured value to $1M. When we lost our home in 2006, the policy was for $500,000. We collected a little over $800,000 and we still owned the raw land valued at $250,000 on top of that. That's not to say we now owned a home worth over $1M, we didn't. It was worth around $500,000. The cost to rebuild was much more than the home value was. Thank God homeowner's insurance isn't like car insurance where they can just total out the house and pay you it's street value and tell you to buy another someplace else.
Keep this in mind if you have it in your mind to self-insure. You don't just get to walk away from the mess. You will be required to pay to clean it all up and you will still be assessed property taxes, still maintain utilities, and be responsible for any liabilities for anyone; contractors or thieves who come to steal lost jewelry or other salvageable items, who may get hurt on your property. Posting Keep Out signs helps with your responsibility, but to risk no insurance is nothing I want to experience.
