The moment hits like a punch to the gut: your perfectly planned escrow is about to fail because your buyer can't secure insurance. It's a scenario playing out with alarming frequency across California, where 1 in 7 agents reported deals falling through due to insurance issues in 2024 – double the rate from just a year ago.
For real estate agents, it's become a painful new reality. "We're now advised to fill out at least three insurance applications before even writing an offer," they tell us. "The market has completely transformed."
The Numbers Tell the Story
The exodus of major insurers from California has created a crisis:
- Seven of California's top 12 insurance companies have paused or restricted new business since 2022.
- State Farm has been dropping 30,000 homeowner policies:
- Pacific Palisades faces a staggering 69% non-renewal rate.
- This is closely followed by Bel Air (67%), Brentwood (62%), Calabasas (60%), Tarzana (50%), Beverly Hills (46%), Encino (40%), Santa Monica (12%), and Sherman Oaks (11%), among numerous other areas outside of Los Angeles County.
The Real Cost to Your Business
When a deal fails due to insurance issues, the impact goes far beyond the lost commission:
Direct Costs:
- Average lost commission in prime markets: $15,000-$30,000
- Marketing expenses wasted: $2,000-$5,000
- Time invested: 40-60 hours per transaction
- Additional showing and open house costs
- Administrative time and resources
Hidden Costs:
- Damaged client relationships and lost referrals
- Reputation impact in your market
- Stress and uncertainty affecting other deals
- Lost opportunity costs while managing the crisis
How to Protect Your Deals
Smart agents are adapting to this new reality by making insurance assessment a core part of their process. Here's your action plan:
- Pre-Listing Insurance Check
- Run a Henge report before taking any listing
- Document all existing mitigation features
- Identify potential red flags early
- Have insurance options ready for potential buyers
- During Property Search
- Check insurance availability before showing properties
- Use Henge's comparison tools to evaluate insurance costs
- Identify properties with favorable insurance profiles
- Keep detailed records of insurance quotes and availability
- During Property Search
- Run preliminary insurance applications
- Document all risk factors and mitigation features
- Have backup insurance options identified
- Include insurance contingencies when necessary necessasary
- During Escrow
- Submit insurance applications immediately
- Monitor application progress closely
- Keep detailed records of all insurance-related communications
- Have backup carriers ready if needed
Take Action Now
Don't let insurance issues blindside your next deal. Henge provides:
- Insurance risk scores and assessment for any property
- Direct connections to insurers
- Tools for client education and communication
Sign up for free and protect your next commission.