Buying a home is exciting, but many homebuyers in California run into a serious problem right before closing:
“The lender says I need home insurance, but no insurance company will insure my house.”
Unfortunately, this situation has become more common in Orange County and throughout California. Insurance companies have tightened underwriting guidelines due to wildfire risk, aging homes, and rising claim costs.
If you cannot obtain homeowners insurance before closing, here are several options that may help you move forward with your home purchase.
Why Insurance Companies May Decline a Home
There are several reasons an insurance company may refuse to insure a property.
Common issues include:
• Wildfire risk areas
• Older roofs or outdated electrical systems
• Previous insurance claims
• Homes near brush or canyon areas
• Vacant properties or homes under renovation
Sometimes the issue may simply be that insurance companies have limited capacity in certain areas of California.
Why You Need Insurance to Close a Mortgage
Most mortgage lenders require proof of homeowners insurance before funding the loan.
This protects the lender’s investment in case the home is damaged by:
• Fire
• Wind damage
• Theft
• Water damage
Without insurance coverage, lenders typically will not allow the loan to close.
The California FAIR Plan – A Common Solution
If traditional insurance companies decline the home, many homeowners turn to the California FAIR Plan.
The FAIR Plan is a state-mandated program that provides basic fire insurance coverage for properties that cannot obtain insurance through standard carriers.
The FAIR Plan typically covers:
• Fire damage
• Smoke damage
• Lightning damage
• Explosion
However, it does not include full homeowners coverage.
Adding a Difference in Conditions (DIC) Policy
Because the FAIR Plan only covers fire-related risks, homeowners often add a Difference in Conditions (DIC) policy.
A DIC policy can provide coverage for:
• Water damage
• Theft
• Liability protection
• Additional living expenses
When combined, the FAIR Plan + DIC policy can provide protection similar to a traditional homeowners policy.
Other Options to Help You Close Escrow
An experienced insurance agent may also help you explore additional solutions.
Possible options include:
• Access to specialty insurance carriers
• High-value home insurers
• Adjusting coverage limits
• Addressing underwriting concerns such as roof repairs
Working with an independent insurance agency can increase your chances of finding coverage.
Home Insurance Challenges in Orange County
Homebuyers in Irvine, Anaheim, Huntington Beach, Santa Ana, Westminster, and other parts of Orange County sometimes experience difficulty obtaining home insurance due to:
• Older homes
• High replacement costs
• Insurance company restrictions in California
Because insurance availability can change frequently, it is helpful to work with an agent who has access to multiple insurance carriers.
Need Help Getting Home Insurance Before Closing?
If you are trying to close escrow and cannot obtain homeowners insurance, an experienced insurance agency may be able to help find solutions quickly.
At Starwest Insurance Services, we help homebuyers throughout Orange County secure coverage needed to close their home loans.
We can assist with:
• Home insurance quotes
• California FAIR Plan policies
• Difference in Conditions (DIC) coverage
• High-risk property insurance solutions
📞 Call: 714-893-7271
🌐 Website: starwestinsurance.com
If you are having trouble getting home insurance before closing, contact us today to explore available insurance options in Orange County, CA.