Viewpoint: What a FAIR Plan Quote Does to a California Home Sale

Underwriters see the risk. Agents see the policy. I see what happens three weeks later, when a buyer sitting in escrow finds out what the house will actually cost to insure. I buy houses directly from owners across Los Angeles County. Most people who call me are in probate, divorce or foreclosure, or sitting on a tenant-occupied rental they no longer want. For most of the last 20 years, insurance never came up in those conversations. In the last two it has come up constantly. The sequence I keep seeing is the same one. Offer accepted. The buyer starts shopping coverage somewhere inside the contingency period. Admitted carriers decline, or quote on terms the buyer never modeled. Their agent assembles a FAIR Plan policy with a difference-in-conditions wrapper to cover what the FAIR Plan does not, and the all-in number lands well above what they penciled in when they wrote the offer. From there it goes one of three ways: the buyer reopens the price, the lender’s debt-to-income math stops working, or the buyer walks. Victoria Sharma None of this is news inside the insurance business. What may be news is where it surfaces, which is at the closing table rather than at renewal. The scale is easy to miss from inside a single book. The California FAIR Plan’s own reporting shows dwelling policies rising from 204,868 at the end of fiscal 2020 to 621,234 at the end of fiscal 2025. That is not a bad fire season. That is a structural migration, and the houses making the trip are increasingly ordinary ones, not only the ones on the ridge. I want to be careful about what I claim beyond that, because I can only speak to my own deals. Of the sellers who called me this year after a conventional sale collapsed, insurance was the stated reason in a sizeable share. In those particular transactions the eventual sale price was below what the first buyer had offered. Whether that pattern holds across the state I genuinely do not know, and I would not want it read as though it does. I should also say the obvious thing about my own side of this. Selling to a cash buyer does not make the insurance problem disappear. It moves it. A cash buyer needs no lender’s approval, so the deal does not die at underwriting — but anyone intending to hold or resell the property is pricing the same risk, and it shows up in the offer. I price it myself. A house I expect to be difficult to insure gets a lower number from me than one I do not, for the same reasons the admitted carrier declined it. Any seller who thinks a cash offer sidesteps the issue has simply not seen the calculation. Which is why the useful intervention sits earlier than any of this. If coverage were quoted before listing rather than after the offer, the problem would surface while there was still time to do something about it. Something often can be done. Roof age and material, documented defensible space, ember-resistant vents, enclosed eaves and a current wildfire mitigation inspection are not only safety measures but underwriting facts, and unlike a kitchen they are cheap to document and they travel with the file. California’s Safer from Wildfires framework already ties discounts to those items. Almost no seller assembles that paperwork before listing, because nobody tells them to. I am not an insurance professional and I am not going to pretend the capacity problem can be solved from the transaction side. It cannot. But there is a gap between what underwriting knows and what the people selling houses know, and the cost of that gap is currently paid by sellers who believe their deal died on the inspection. If you write homeowners business in California, the most useful thing you can do for the housing market this year is free: tell your agent partners to quote the house before the sign goes in the yard. Victoria Sharma is the manager of Cash Home Buyers CA, a Woodland Hills company that buys houses directly from owners across California. Topics California