Losses on a large scale at the same time
- Many claims in a short time
- Rebuilding costs rise after a disaster
- Reinsurance becomes more expensive
- Premiums rise for the whole area
Wildfires · natural disasters · underwriting policy
Why is home insurance so expensive in California?
In California the debate is about risks an insurer can barely spread. That also shows where Dutch buildings insurance has its limits.
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Deze pagina in het Nederlands: Waarom is de verzekering van huiseigenaren zo duur in Californië?.
The calculator and the quote form below are in Dutch. Prefer to do this in English? Email info@finassverzekert.nl or call 072 - 509 24 56 and we will take it from there.
Work out your own premium with the calculator.
Enter your details; you will receive a proposal within one working day.
- We compare the offerings of several insurers
- An adviser checks whether the cover suits your situation
- We arrange the switch, including cancellation
A premium indication, not personal advice. Prefer to talk it through? Call 072 - 509 24 56.
In brief
American homeowners insurance is not comparable with Dutch buildings insurance (opstalverzekering): it is a package policy combining the building, contents and liability. In California that policy runs into a concentration of risks that does not spread well. Recurring wildfires affect not one home but whole neighbourhoods at once, and it is precisely that accumulation of losses in a short time that makes a risk expensive or uninsurable.
On top of that, the largest natural disasters are not included in the ordinary policy. Earthquake damage is excluded as standard in California and calls for separate insurance, and flooding falls outside the regular cover too. Anyone who wants protection against those has to take out several policies. Insurers have also tightened their underwriting policy in high-risk areas or have stopped taking on new customers there. Anyone who cannot find cover falls back on the FAIR Plan, a safety-net facility with limited cover.
The Californian example shows what insurance can and cannot do: spreading individual accidents works, spreading a simultaneous disaster across a whole region does not. That limit is in Dutch policies too. Also read why Dutch buildings insurance premiums have risen.
Why does a regional risk become so expensive?
Three mechanisms explain why home insurance in a disaster-prone area becomes expensive.
Disasters outside the policy
Earthquake and flood fall outside the regular American home policy.
- Earthquake through separate insurance
- Flood arranged separately
- Several policies alongside each other
- A safety net with limited cover
Insurers withdrawing
In high-risk areas no cover, or only limited cover, is offered any more.
- Stricter fire prevention requirements
- New applications sometimes refused
- Rates supervised by the state
- The choice of providers shrinks
What is covered
| Situation | The Netherlands | California |
|---|---|---|
| Fire damage to the home | Yes | Yes |
| Storm and hail damage to the roof | Yes | Provided that |
| Earthquake damage to the structure | No | No |
| Flooding caused by a flood defence giving way | No | No |
| Contents and liability on the same policy | No | Yes |
| Subsidence, pile rot and deferred maintenance | No | No |
What is actually covered, including exclusions, limits and the excess, is set out in the policy conditions and the insurance card (verzekeringskaart) that you receive before you take out cover.
Four lessons for the Dutch homeowner
The Californian example makes clear where the limits of cover lie here too.
Insurance spreads accidents, not disasters
Insurance works because many people pay and few suffer a loss at the same time. With an area-wide disaster that logic falls away: everyone claims at the same moment. That is why insurers in such areas work with higher premiums, stricter acceptance or safety-net arrangements. That is not arbitrary but a mathematical limit, and that limit also explains why certain risks do not appear in Dutch policies.
A Dutch policy also excludes certain natural disasters
Ordinary buildings insurance covers storm, hail, lightning and usually water damage after heavy rainfall. Outside the cover remain earthquake and volcanic eruption and flooding caused by the failure or overtopping of a primary flood defence. For damage caused by gas extraction in the earthquake area there is a separate public scheme. So do not look only at what your policy does say.
Loss prevention increasingly determines acceptance
In California, requirements are set for vegetation around the house and for fire-resistant materials. Dutch insurers also steer on prevention: requirements for locks and fittings, smoke detectors, the flue with a thatched roof or a lightning conductor. Those requirements appear as a clause on your policy. If you do not meet them when you claim, the payment can be restricted. Treat them as a condition, not as advice.
The ordinary exclusions apply everywhere
Apart from natural disasters, no buildings policy covers subsidence, foundation damage or pile rot, damage caused by deferred maintenance, wear and tear and construction or material faults, or damage caused by vermin, mould and slowly penetrating damp. Damage you cause intentionally or through recklessness is excluded under Article 7:952 of the Dutch Civil Code. When taking out cover, the duty of disclosure under Article 7:928 of the Dutch Civil Code.
What does your premium depend on?
- Rebuild value — the main basis for calculation
- Location and regional risk — fire, storm and water in the area
- Construction type and roof covering — brick, timber or thatch
- Prevention and security — a condition of acceptance
- The insurer's claims burden — and the cost of reinsurance
- Type of cover and excess — extended or comprehensive
Insurers weigh these details differently. That is why comparing pays off.
How we arrange it
- You request a quoteWe take stock of your situation, risk and wishes.
- We compareseveral insurers, on premium as well as conditions.
- You receive a proposalWith an explanation of the differences and the exclusions.
- We arrange the switchIncluding cancellation, so there is no gap in cover.
9.5New policy
9.8Claims handling
Customers rate our service on four aspects: personal service, service delivery, availability and the outcome. The reviews are collected and published by NH1816 and come from customers who have actually taken out a policy with Finass Advies B.V. or reported a claim.
Frequently asked questions
The questions we are asked most often about this.
Why are insurers in California stopping taking on new customers?
Because the risk does not spread well. Wildfires hit whole neighbourhoods at once, so that in a single event an insurer has to pay a great many claims at the same time. Combined with higher rebuilding costs and more expensive reinsurance, such a portfolio becomes unprofitable. Insurers then restrict acceptance in high-risk areas, so that the choice of providers there shrinks.
Is earthquake damage covered in California?
No. Earthquake damage is excluded as standard from regular American home insurance and calls for a separate policy. The same applies to flooding, which also falls outside the ordinary cover. Homeowners in high-risk areas therefore need several policies alongside each other, each with its own premium and excess.
Could the same happen in the Netherlands?
The risks differ, but the mechanism is the same. Here too the claims burden is rising because of storms, hail and heavy rainfall, and that feeds through into rates. Large-scale flooding caused by a primary flood defence giving way is not covered by ordinary buildings insurance in the Netherlands, precisely because such an event cannot be spread privately.
Which natural disasters does Dutch buildings insurance cover?
Storm, hail, lightning and usually water damage after extreme rainfall, although the last of these often has its own excess or waiting period. Earthquake and volcanic eruption are excluded, as is flooding from a primary flood defence. For damage caused by gas extraction in the earthquake area there is a separate public scheme outside the insurers.
What can I do myself to remain insurable?
Make sure your home meets the loss prevention requirements on the policy schedule: locks and fittings, smoke detectors, maintenance of the roof and the flue. Report building work, solar panels or a change of use, such as room letting or a vacancy. Deferred maintenance is not only a ground for exclusion; at renewal it can also lead to tighter conditions.
Read more
Within Opstalverzekering
- Opstalverzekeringthe main page
- De gevolgen van de branden in californie voor nederland
- De recente branden in californie en de gevolgen voor verzekeraars
- Opstalverzekering voor luxe woningen hoe bescherm je je villa tegen schade
- Why buildings insurance (opstalverzekering) protects your biggest asset
- Why we work with different insurers
- Ontdek de belangrijkste redenen waarom een eigendomsverzekering essentieel is voor huiseigenaren
Similar pages
- Wildfires in California: what does that mean for the Netherlands?
- Wildfires in California and the consequences for insurers
- Why property insurance is essential for homeowners
- Buildings insurance (opstalverzekering) for luxury homes: how to protect your villa against damage
- Insuring flood risk as well: what is and is not possible?
Would you like to know what your policy does cover?
Request a quote without obligation; we go through the covered and excluded causes with you.
Prefer to call? 072 - 509 24 56, weekdays 09:00–17:00.
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About our service
Finass Verzekert is a trading name of Finass Advies B.V. We advise on and arrange non-life insurance on the basis of an objective analysis of several insurers, and receive commission for this from the insurer, which is included in the premium. You pay no separate advice fee. Before you take out cover, we establish your wishes and needs.
You will find our licence, KvK and Kifid details and our complaints procedure at the foot of every page.
This page was written and checked by an adviser at Finass Verzekert. Last updated on .
The information on this page is general in nature and is not personal advice.