Insurance woes impacting San Diego real estate market – CBS News 8

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SAN DIEGO — As housing insurance companies continue leaving California, it’s having an impact on the San Diego real estate market.

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“Every single morning when I wake up, I fear that there’s going to be an email in my inbox that a certain insurance company is no longer going to be writing new business in California,” said Kiyoma Yoshizumi, an insurance broker based in San Diego.

Yoshizumi often works with homebuyers to find insurance, but says recently, that process has hit a major snag.

“We have never been in this position where it was difficult to find insurance policies for people,” said Yoshizumi.

Yoshizumi says while he has managed to find plans for his clients, they come at a higher cost,  forcing some to rethink what home they’re buying and where.

“Just a couple of weeks ago, we had a client who was slated to purchase a home in Escondido. They got their offer accepted, the lender reached out to me and said, hey, is this going to be a difficult one to insure because it is in Escondido, and we were able to find a quote, no problem for this client. But the problem was the client wasn’t anticipating that high of an insurance premium,” said Yoshizumi. 

That client pulled out of the deal.

Another problem – while the California FAIR Plan is an option for anyone who can’t find insurance, with applications up 50% since March, there’s a backlog, putting escrows at risk.

“It’s taking some time for them to be able to issue policies for all of California in a lot of the fire zones that have changed and increased here, especially in San Diego. So not only is it time that’s taking up from your transaction, but also cost, said Garrett Tyler, a lender with the Gaylord-Hansen team.

Tyler told CBS 8 that while deals have come down to the wire, he personally hasn’t seen any fall apart.

Still, CBS8 asked what advice he’d give to ensure that doesn’t happen.

“The agents should be working with their buyers immediately on getting this started from the beginning so that the lender isn’t waiting for this piece clear with the underwriting,” said Tyler.

According to the California Association of Realtors, in 2023, seven percent of deals statewide did fall apart due to an insurance issue.

“To address growth, the FAIR Plan dramatically increased staffing, including tripling customer service representatives and doubling the underwriting team. These changes have greatly reduced delays and brought service levels back to a more normal level,” the spokesperson told CBS 8.

WATCH RELATED: State Farm to cut 72,000 home insurance policies

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