“If you look at the general public and you tell them, ‘We’re letting insurance companies just raise their premiums to whatever they want,’ from a political standpoint, you’re not going to win a lot of favor,” he said. “Because the consumer is going to go, ‘Well, you’re not protecting me. You’re protecting the insurance companies.’ Because they don’t have an actual understanding of how this is operating.”
For the time being, brokers have to prepare homebuyers for the possibility of pricey insurance premiums, especially if they are forced to go with the FAIR Plan. Nurani said they started changing the way they calculate insurance a couple of years ago to calculate expenses more accurately.
“About two years ago, when we started pre-approving people, we increased the amount of premium that we were calculating for,” Nurani said. “Five years ago, we were estimating premiums to be around $1,200 a year for a single-family residence. That was an estimated $100 a month. Right now, depending on where they live, anywhere between $200 and $300 a month is what we’re calculating, because that’s what the premium actually is.”
Mortgage broker Matt Gouge says high prices and rates are causing buyer hesitation, especially in California, but underlying demand remains strong.https://t.co/8rvCRZ2LYt
— Mortgage Professional America Magazine (@MPAMagazineUS) July 30, 2025
The risk to brokers and homebuyers of getting that estimate wrong could end up tanking a deal. While Nurani hasn’t heard of it happening frequently, he has seen where home purchase contracts fell through because of the extreme cost of the FAIR Plan policy.
“It’s not crazy frequent, because we already hedge for it on the front end by calculating,” he said. “There was one specifically that we had to cancel the contract on that sticks out to me distinctly. The California FAIR Plan policy priced at $6,000 a year, $500 a month, for insurance on the home. It killed the deal.
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