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All About AB 1867 Insurance


Homeowners Insurance in California

As millions of homeowners are finding out, insurance on their most valuable possessions—their homes—is either too expensive or not available.


State Farm even pulled out of the homeowner market in California but has recently changed course and is offering some policies at a 20% premium increase, which was just approved by the CA Department of Insurance in its attempt to get coverage on the market. (I’m told State Farm asked for a 29% increase).


Understanding HOA Homeowners Insurance Challenges


Why Is HOA Insurance in California Expensive?


Natural Disasters

We've been seeing more losses lately because of an uptick in wildfires, floods, and high winds–causing a lot of damage to properties and communities and ultimately putting a big financial strain on everyone involved.


Market Withdrawal

Because of these growing risks, companies like State Farm decided to leave the market at first, which left many customers without coverage options.


Premium Increases

To help insurance companies manage the financial burden, a 20% premium hike was recently approved in California, which is meant to help cover the rising costs that come with the increasing frequency and severity of natural disasters.


The California Fair Plan


This program is a lifeline for homeowners. It offers low-rate coverage for those who can't get traditional insurance–especially in high-risk areas like wildfire zones. And by approving new rates, the Department also hopes to cover more homes, ensuring even those in risky spots get the protection they need.


This initiative not only helps individual homeowners but also boosts the stability and resilience of communities across the state.


Homeowners Fair Plan in California

Assembly Bill 1867: Relief for Homeowners


Designed to help ease the pain of high premiums for many homeowners, this bill offers a tax deduction for the insurance premiums you pay over the next five years, giving you some financial relief if you're struggling with these rising costs.


Just a heads-up, this deduction is only for primary residences, so it doesn't cover second homes or many of your investment properties like short-term rentals. So by focusing on primary residences, the bill aims to support those of us who depend on our homes as our main living space, making it a bit easier to manage overall expenses.


Key Points of AB 1867


  • Tax Deduction: Allows a tax deduction for insurance premiums on primary residences.

  • Exclusion: This does not apply to second homes or investment properties.

  • Urgency Statute: If passed, it will become effective upon the Governor’s signature.


Legislative Process


Over the next few months, the bill will go through a bunch of hearings where our legislators, experts, and the public can also chime in with their thoughts and feedback. If it makes it through both the Assembly and Senate and gets the Governor's signature, it will kick in right away and start affecting policies immediately.


But keep in mind that any bill can be tweaked at any point during this process, so expect some changes and other revisions before the final version is set in stone.  In fact, the bill was put on the “suspension file” due to expected losses to the State’s General Fund as owners use the tax credits at a time when the State Budget is literally tens of billions of dollars short.  And, a new revised budget will be finalized this week.  Thus, AB 1867 may not move ahead but HOA Laws will keep you updated. 


How HOA Laws Keep You Informed


HOA Insurance in California

At HOA Laws, we are committed to keeping you informed on this crucial legislation and how it affects your HOA homeowners insurance.


FAQs


Can an HOA Require Homeowners Insurance?


Yes, some HOAs do ask homeowners to have an insurance policy, as stated in their rules and by laws. (And, of course, mortgage companies require HO insurance). This helps protect both individual homes and the whole community from risks like natural disasters, theft, or even accidents. With this, you as residents can cover damage costs to your homes and also help keep the neighborhood safe and financially stable.


Does HOA Cover Homeowners Insurance?


It usually covers common areas and shared amenities like clubhouses, swimming pools, and landscaped spots–protecting the community's assets and public spaces from damage or liability.


However, individual homeowners are typically responsible for insuring their own properties. This means coverage for the inside and outside of their homes, personal belongings, and personal liability. Keep in mind that the specific requirements and coverage details can vary based on your HOA's rules and regulations.


So, it's a good idea for you to review HOA documents and check with your providers to ensure you have the right coverage.



For more information on including how it impacts your coverage and obligations, continue to follow our updates and consult with insurance professionals who specialize in HOA policies.


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