When Pete Alexakis moved to Fallbrook 11 years ago, one thing hooked him: "An advertisement about Fallbrook being one of the last areas where you could buy a little bit of land and be close to the ocean," Alexakis said.
His home is surrounded by green, rolling hills and trees. To him and his family, they offer beautiful views.
But to insurance companies, they're an extreme fire hazard.
"Eleven years ago, we had choices," he said. "We were able to get from one of the Berkshire Hathaway companies, a preferred homeowner's policy with ... full coverage and good rates."
But in December, he received a nonrenewal notice from his insurer. The company said it was because of the fire danger.
Alexakis was forced to join California’s FAIR Plan for basic fire coverage only. For additional coverage, he purchased a separate policy from another company.
He said a new policy with the same coverage he had before the nonrenewal notice would have cost him 80% more.
"So what we did was, we offset some of that expense by going tremendously higher with deductibles and foregoing some other coverages just to make it affordable," he said.
Alexakis is not alone.
Insurers like State Farm and Allstate have been offloading their California clients, and while officials in Sacramento try to reach a compromise with the insurance agencies, homeowners are left with limited options.
Ashley Beier Walasek is an insurance broker in Fallbrook. She said most homeowners are going with the California FAIR Plan fire coverage, and then filling in coverage gaps with other policies for things like water, theft or liability.
"It just depends on every individual client, their family and their financial needs. So it really varies. But the higher of a deductible you have, the lower your premiums going to be," she said.
And some homeowners are choosing another option: non-admitted policies. Beier Walasek said these come from out-of-state companies that aren’t licensed to do business in California.
"And what that means is that they are not held to the same regulatory financial stability laws that we have here," Walasek said. "But they're also able to insure riskier ventures, whether it's in a fire area or if it's a commercial policy."
But there is a risk with non-admitted, out-of-state carriers: Admitted carriers are backed by the state; non-admitted carriers are not.
"If the (non-admitted) company becomes insolvent, or goes bankrupt, and they are not able to pay out the claims that you're paying the coverage for ... as a California resident ... you are not able to go to the state to either appeal or ... fight back to get any help from the state," she said.
She said non-admitted carriers can be a good option for homeowners in fire-risk areas or for commercial policies. And research is key when shopping the non-admitted market.
"When searching for a policy, the first step is to check the rating of the non-admitted carrier. If it’s high and holds an A+, it means the company has a strong financial stability rating," she said.
Policies are handled case by case, and vary depending on the location and age of a home, and the coverage and price a homeowner wants, and can afford.
"(For) people who have fixed incomes, it's very difficult to see their premium triple in a year, and their incomes aren't increasing," Walasek said.
Homeowners are having to make tough decisions.
Some choose to go uninsured or underinsured, and others are choosing to sell their home and move out of California.
"I can't believe that an insurance policy, and not being able to afford it, is dictating your move ... your life," Walasek said.
