The FAIR plan isn't tax supported, and its bare-bones coverage - just fire and smoke damage - is paid from policy premiums that can be much more expensive than regular insurance because the risk pool is much higher.... Roach said that the FAIR Plan has encountered the same problems as regular insurance providers in getting policy rate increases approved to provide enough revenue to cover its risk exposure.
As I've mentioned before, I don't see any way out of it. Rates need to rise, but they are already no longer affordable for more and more people. It's exacerbated by the fact that construction costs are so high in California as well.
This is starting to really stretch budgets. My neighbor was hopping mad the other day. He is retired on a fixed income and his insurance increased by $1000 this year and he complained a lot and finally paid it. But he said that another $1000 and he's out. Most people think it's robbery and don't accept that even at that cost, FAIR Plan is at risk of not being able to meet its obligations.
If we had enough retirement savings to guarantee a comfortable retirement even if the house value went to zero (which is a goal, but not yet attained), I would quit paying for insurance. We pay $11,000 on what by most American standard is a very modest home. If I invest my insurance money every year at 5%, at the end of 10 years, that's $154,000 ($173K at 7%). At the end of 20 years it's $392K/$494.
The paradox, of course, is that without the insurance payment, it would be much faster for us to reach a savings level where we felt okay foregoing insurance and just accepting that if the house burned we doul walk away with nothing.
