Did You Know Home Insurance Could Blow Up Your Home Buying Dreams? What’s a Home Buyer to Do?

Sharon Alva August 26, 2025

Getting a policy when buying or selling your suddenly uninsurable home can have a huge financial impact. Some carriers are not renewing policies due to increased wildfire risks, necessitating the search for alternative coverage. In March 2024, State Farm announced that it would not renew around 30,000 home insurance policies in California, with non-renewal beginning on July 3, 2024.

Many insurers now require a 4-point inspection, focusing on roofing, electrical, plumbing, and HVAC systems. There is now no tolerance for any remnant of visible knob and tube wiring. Sellers not willing or able to rewire homes find themselves selling houses that are now less desirable.

Galvanized steel plumbing can also affect insurance coverage availability. Farmers Insurance will no longer insure homes with galvanized steel, for instance.

The insurance of last resort has been the California FAIR Plan, offering basic property insurance when traditional coverage is unattainable. With more Californians relying on the FAIR Plan than ever before, a major disaster could find the plan insolvent. Last year, lawmakers concerned about the solvency of the FAIR Plan tried to find a legislative solution to address it, but no lawmaker sponsored a bill to do so.

So what are home sellers and especially home buyers to do?

1. SELLERS who want their property to draw strong offers and multiple offers should consider updating outdated systems. Hire an inspector certified to do a 4-point inspection, and then upgrade items that impact insurability.

2. Buyers, DO NOT be so eager that you remove the contingency for “insurability”. Only when you have a policy approved should you remove that contingency.

3. When financing a home purchase, communicate with your LENDER about the monthly cost of your policy. It could impact how much loan you QUALIFY to take.

4. Ask your REAL ESTATE AGENT TO NEGOTIATE an upgrade to systems when possible. The market has shifted so buyers and sellers are on more even footing, and sellers do not have the upper hand in every case.

5. When the house is uninsurable as-is, CONSIDER THE FAIR PLAN. Buy the home, then upgrade the older system (knob and tube wiring or an older roof, for instance), and then shop around again.

I work with my clients on all aspects of their home sale and purchase. I help them navigate all the challenges in their real estate transactions. Today it's insurance, but tomorrow it may be something else. I am here to help you navigate the changing real estate landscape. Call me if you are starting the buying or selling process.