In the upscale hillside town of Woodside, nestled in Silicon Valley, the skyrocketing cost of homeowners insurance is making potential buyers think twice before making a purchase. To help their clients navigate this complex landscape, some real estate agents are stepping into the insurance advisory role, providing insights into potential insurance costs for desired properties before any offers are made.
Cara Gamble, an agent with The Agency in Danville, has been particularly proactive in researching insurance rates for her clients. “I want to make sure my clients can afford the premiums in addition to the house price before they even think about making an offer,” she explained. Gamble has noticed that several prospective buyers have opted out of making offers after learning that insurance costs were just too steep.
Scott Hayes, another real estate agent based in Woodside, has observed a downturn in home tours over the past year. Many potential buyers have realized that in areas prone to wildfires, their only option is often an expensive insurance policy through California’s state-run FAIR plan, which many private insurers are steering clear of. “To live in such a desirable neighborhood, buyers really have to accept these insurance conditions—there are no alternatives,” Hayes said.
The situation has worsened as private insurance companies are sending letters to numerous homeowners across California, opting not to renew policies. This has led to a dramatic increase in properties covered under the FAIR plan, soaring from 126,709 to an astonishing 350,000. “The unpredictability of insurance costs really affects people’s willingness to buy homes,” Hayes noted, adding that some individuals are skipping home viewings entirely, believing it’s pointless if they can’t secure insurance.
That said, Hayes mentioned that none of his clients have walked away from contracts due to insurance costs, as he takes the initiative to check FAIR plan rates in advance. For a $2 million home in Woodside, he shared, annual insurance premiums can range from $15,000 to $20,000.
Despite these hurdles, homes in the Bay Area continue to attract interest, leading buyers to be hesitant about utilizing “contingency clauses” that would allow for contract cancellations, worried it may tarnish their standing with sellers. Melody Johnson, also with The Agency in Danville, pointed out that she keeps a list of insurers who are still underwriters of homeowners insurance at her desk, ready to check rates for her clients.
Johnson added that many well-known insurance companies have largely stopped issuing new policies, leaving a handful of smaller, less familiar firms as the only remaining options for homeowners.
