By William Rodarmor

In case you haven’t noticed, getting and keeping homeowner’s insurance has become a major problem. Spooked mainly by soaring water- and mold-related claims, insurance companies are bolting the market and barring the gate behind them. Premiums have jumped, policies aren’t being renewed, and some people can’t get insurance at all.

“The market is very hard,” says Concord MSI Insurance agent Lance Brick. “In a hard market most companies aren’t writing homeowner policies, and those that do have lots of restrictions.” MSI is a “preferred writer,” he says, “which means we don’t write policies on ‘problem houses,’ or where there have been claims.” But MSI is not alone. State Farm has stopped writing new homeowner policies, and Farmers Insurance won’t write policies on houses more than 70 years old, says Brick, “which wipes out two thirds of the homes in Berkeley and Oakland.”

Lining up homeowner’s insurance used to be one of the last tasks a buyer would perform before closing a sale; now it’s one of the first. Homeowner’s insurance is required to close any home purchase involving a new mortgage. A lender won’t give you a loan unless you have hazard insurance on the property, with the lender named as an additionally insured. And if you can’t get insurance, you usually can’t get a loan.

For the first time in recent history, the new California Association of Realtors purchase contract specifically alerts the parties to insurance issues. It requires sellers to disclose “known insurance claims within the past five years,” and advises buyers to “confirm the insurability” of the buyer and the property.

For buyers, arranging insurance ahead of time has become vital. “It’s a major contingency,” says Mark Dronkers of Crist, Fritschi & Paterson, an insurance agency in Oakland. It can be an obstacle particularly for houses built before 1950, says Dronkers, with fire and quake risk joining the problems of water and leaks. “It’s problematical for houses with wood roofs, fuses instead of circuit breakers, or houses that are on a slope.” It’s easier to get insurance on houses in the flats than in the hills, he says, “and it gets worse the closer you get to a brushy area.”

Buying a house with a past history of claims can be especially difficult. Insurance carriers check a property’s claim record before they will write a policy on it. Water or mold claims are red flags, of course, but homeowners can also set off alarms simply by asking about their coverage, without ever filing a claim.

Most insurers research a house’s insurance history through a claims-sharing database called the Comprehensive Loss Underwriting Exchange, or CLUE, maintained by ChoicePoint in Alpharetta, Georgia. Because the information is shared, an MSI agent can find out if a claim was made against State Farm, for example. Homeowners can buy their own CLUE reports at www.choicetrust.com. (At the same site, you can also order a copy of your credit report and score.)

The CLUE report lists every claim filed against the house in the last five years, and even includes inquiries about potential claims. So you should file claims only for substantial losses. Making small claims can lead to higher premiums or cancellation. And if you ever need to call your insurance agent to see if you are covered for possible damage, be sure to start the conversation by saying something like, “Mary, this is a completely hypothetical inquiry.” Otherwise, Mary might open a file on the inquiry, which will show up in your CLUE report and cause trouble later on.

The single most important way homeowners can avoid insurance hassles is by upgrading and maintaining their property. If the roof leaks, get it fixed. Then check your electrical, heating, and plumbing systems. “The house better have circuit breakers; fuses are a no-no,” says Brick. “We want to see forced-air heating. If you have a fireplace, how recently was it cleaned? Creosote in the chimney can burn, and smoke damage alone can trash a house.” The homeowner should show that a competent electrician upgraded the system to modern code and that all major appliances have their own outlets. Because of the threat of water and mold claims, insurers pay special attention to plumbing. “If you have old galvanized water lines, replace them,” he says. “Carriers want to see copper or plastic.”

What should the owner do when it comes time to sell? Says Brick: “My very first recommendation is this: If there have been any claims on the house, disclose them, and give the buyer as much information about the claims as possible, so the buyer can check them out.” If your CLUE report is clean, you can use it as a marketing tool. “And if you have had repair work done by licensed contractors, give the buyer all the paperwork,” says Brick. “That way, if problems turn up later, the buyer can go after the contractor.”

If you are a buyer, insist that the seller provide a CLUE report and share it with your agent. Only the owner can obtain the report, but you can request a copy as a condition of your purchase offer. If you are renting and thinking of buying a house, take out a renter’s insurance policy now. That way, you will already be a customer when the time comes to seek homeowner’s insurance. And if your purchase contract doesn’t include an insurance contingency, find out if you can get and afford insurance before you remove your inspection contingency.

California homeowners who can’t get insurance on the open market can turn to a state-run, industry-financed program called Fair Access to Insurance Requirements (FAIR), which was created after the 1994 Northridge earthquake. It is more expensive than regular insurance and covers only fire damage — there is no provision for liability or water damage — but it meets the minimum requirements of mortgage lenders.

Statewide, home prices ended 2002 on a high note, as the median price of an existing home increased 20.l2 percent in December 2002 compared to December 2001, according to the California Association of Realtors. The median price rose to $338,110, a new record for the state. In the Bay Area, the price hit $416,000, up 10.3 percent for the year. The market in the East Bay continues to be driven by high demand and low mortgage rates. At the end of January, the average 30-year fixed mortgage interest rate fell to 5.91 percent, down from 6.96 percent a year ago.

• In 1900, a Berkeley ordinance made it illegal to have more than two cows per acre of land.
• In 1900, ferries ran between Berkeley and San Francisco from 5:30 am until 1 am.
• Lake Merritt is the largest urban saltwater body in the United States
  The 420-acre campus of Saint Mary's College is ranked among the top 20 most beautiful campuses in the country.
• At the turn of the last century, bands of gypsies regularly camped in West Berkeley.

William Rodarmor is a freelance writer, editor, and French translator in Berkeley, California.