California's Insurance Crisis, Explained by an Expert

By Hal Sweasey

Hal Sweasey is a highly respected Broker and REALTOR® serving California’s Central Coast, bringing more than 35 years and 3,300 successful property sales.

The California insurance market has been one of the biggest stories in real estate over the past few years. Prices spiked. Companies pulled out. Homeowners who’d never had trouble getting coverage suddenly found themselves scrambling, and most people still don’t fully understand what happened, where things stand now, or what to do about it.

We sat down with Trevor Moriarty from Farmers Insurance, a 30-year industry veteran with an office right here on Pacific Street in San Luis Obispo, to get real answers. Our co-host John Terry, who spent 38 years in insurance himself, joined the conversation, so between Trevor and John Terry alone, that’s 68 years of experience in the room.

Inflation broke the model. For 40 years, inflation ran at 2 to 3% a year, and insurers built their entire forecasting around that. Then it hit 6 to 7% two years running, concentrated in the two costs that matter most to them, repairing homes and repairing cars. Add California’s limits on how fast carriers can raise rates, and companies found themselves overexposed and pulling out of the state.

The market has stabilized. Trevor told us Farmers is open on all lines and can often bind a policy the same day in most of San Luis Obispo County, something that wasn’t possible a year or two ago, and other carriers are coming back too. The crisis isn’t over, but the acute phase has passed.

If you’re buying, shop early. Get insurance quotes before you’re deep into escrow, because we’ve seen deals fall through on pricing alone. Send your agent two or three addresses in the neighborhoods you’re considering and get numbers up front, since insurers manage exposure street by street, and your neighbor’s coverage doesn’t guarantee yours.

Lean toward higher deductibles. Self-insure the smaller losses and save your policy for the catastrophic ones. Claim frequency hurts you more than severity, and one claim makes the next one statistically far more likely, so keeping small claims off your record keeps you insurable long-term.

Defensible space is the throughline on wildfire. Nothing combustible within 5 feet, no dead vegetation within 30, reduced density within 100. The home left standing on a burned hillside is almost always the one with cleared or hardscaped ground right around it, so replace wood gates and fencing near the house with metal and clear dead growth.

The FAIR Plan isn’t as scary as it sounds. It’s the insurer of last resort, and Trevor’s seen policies come in at just a couple hundred dollars when paired with a difference-in-conditions policy for the coverage fire alone doesn’t include.

You can watch the full conversation above, or feel free to skip to the topics that interest you most using the timestamps below:

00:00 — Meet The Guest

01:05 — What Caused It

03:06 — For Buyers Today

05:46 — Filing A Claim

07:31 — Higher Deductibles

11:36 — Defensible Space

16:02 — Commissioner Election

19:51 — The FAIR Plan

21:11 — How To Reach Trevor

If you have questions about your insurance situation, whether you’re buying a home, renewing a policy, or trying to figure out whether to file a claim, Trevor’s team is a great resource: Farmers Insurance, 355 Pacific Street in San Luis Obispo, (805) 544-8300, or @slocal.agent on Instagram and Facebook.

And if you have questions about real estate in San Luis Obispo County, we’re always here. Call us at (805) 781-3750, email us at hal@teamsweasey.com, or visit teamsweasey.com. Have a great day, and we’ll see you on the next episode.