Hi Ted,
That’s a great question and one that more and more homeowners will be asking in the future. Unfortunately, there isn’t a one-size-fits-all answer, but here’s how we would suggest approach making this decision:
Priority 1: Make Sure You Have Enough Coverage to Rebuild
The most important thing is ensuring you have enough insurance to fully rebuild your home. The California FAIR Plan caps out at $3M, which may not be enough when you factor in personal property, loss of use, building code upgrades, and debris removal. If you need $5M in total coverage and only purchase $3M, you’re putting yourself in a tough spot. Regardless of which route you take, make sure you’re buying the correct amount of coverage to properly rebuild.
Priority 2: Research the Financial Strength of a Non-Admitted Insurer
If you’re considering a non-admitted insurer, check their financial stability. You can look this up online by Googling the insurer name + “AM Best Rating”, or just ask your broker. Some non-admitted carriers are backed by large, reputable insurance groups, while others may be more risky. My personal rule of thumb? Avoid insurers with an A- (A minus) rating or lower—strong financial backing matters when it comes time to pay claims.
Priority 3: Review the Policy Terms Carefully
If you’re leaning toward a non-admitted policy, review the terms closely and make sure you’re aware of:
What are my deductibles? Are they different for fire vs. water damage?
Are there any wildfire exclusions or restrictions? Some policies have exclusions that could leave you exposed in a worst-case scenario.
After going through these steps, you’ll be in a much better position to make an informed decision. I hope this helps guide you forward!
Amir
