Case Study: How We Saved a Belmont Home Purchase from the CA Insurance Crisis

From Dream Home to Uninsurable: A Belmont Hills Case Study

In the 2026 Bay Area market, inventory is tight and competition remains steady. My clients, a tech couple from San Francisco, were ready to trade their SOMA condo for a single-family home with a yard on the Peninsula. They had their pre-approval in hand and a clear budget. After a few weeks of searching, they found the perfect property: a beautiful mid-century home tucked away in the hills of Belmont, offering serene views and excellent schools.

We crafted a strong offer that was accepted. During the contingency period, everything seemed to be on track. The inspections were clean, and the appraisal came in at value. Then, we hit the wall that is derailing more and more Bay Area transactions: the homeowner’s insurance crisis.

The Problem: A Mainstream Carrier Rejection

My clients contacted their national, well-known insurance carrier for a quote, expecting a routine process. They were wrong. The carrier flatly denied coverage, citing the home’s location in a “High Fire Hazard Severity Zone.” This wasn’t a remote cabin in the Santa Cruz Mountains; this was a prime Belmont property, minutes from Highway 280. Without proof of insurance, the lender would not fund the loan. The deal was on the verge of collapsing.

The Three-License Solution in Action

This is precisely where our integrated real estate, mortgage, and insurance model becomes critical. Instead of panicking, we executed a clear, multi-pronged plan.

• The Real Estate Angle: Using Contingency Time Wisely. We always advise clients to secure an insurance quote immediately after an offer is accepted, not a week before closing. Because we acted fast, we had time within our 17-day contingency period to solve this without needing a risky extension.
• The Insurance Angle: Navigating the Insurer of Last Resort. As a licensed insurance broker, I immediately pivoted. We secured a policy from the California FAIR Plan, which provides basic fire coverage when traditional markets will not. However, the FAIR Plan is not comprehensive. It doesn’t cover liability, water damage, or theft. We then sourced a separate “Difference in Conditions” (DIC) policy from a specialty carrier to wrap around the FAIR Plan policy, providing the comprehensive coverage the lender—and any sane homeowner—requires.
• The Mortgage Angle: Satisfying the Underwriter. A two-policy insurance structure can confuse a loan underwriter. As the mortgage broker on the file, I proactively packaged both the FAIR Plan and DIC policy declarations and sent them to the lender with a clear cover letter explaining the structure. We ensured the dwelling coverage amounts met or exceeded the loan requirements and that the lender was correctly listed as the mortgagee. This preemptive communication prevented underwriting delays and kept the closing on schedule.

The Financial Reality: The New Cost of Ownership

We saved the deal, and the clients closed on their dream home. However, it’s crucial to be direct about the financial impact. Their initial budget for insurance was around $2,500 per year. The combined FAIR Plan and DIC premium came to nearly $9,000 per year. This significantly increased their total monthly PITI (Principal, Interest, Taxes, and Insurance) payment. Because we uncovered this during the contingency period, they were able to make an informed decision to proceed, adjusting their household budget rather than facing a devastating surprise right before closing.

Alan’s Pro Tip

Before you even write an offer on a property, especially in hillside areas like Belmont, San Carlos, Hillsborough, or Los Gatos, ask the listing agent for a copy of the seller’s current insurance declaration page. If they are on the CA FAIR Plan, you know from day one that you will face the same challenge and higher cost. This front-loads your due diligence and lets you factor the true insurance cost into your offer price and overall budget.

This case highlights a growing reality in the Bay Area. Buying a home is no longer just about the price and the interest rate. The availability and cost of homeowners insurance can make or break a transaction. Navigating this new landscape requires a broker who understands how all three pieces—the property, the financing, and the insurance—fit together.

Disclaimer:
The market trends, interest rate data, and policy interpretations provided in this article are for informational purposes only and do not constitute legal, tax, or investment advice. The real estate market and mortgage rates are subject to rapid change. Please contact us directly for the most current information and personalized advice.

Real Estate and Mortgage Services provided by:
Golden Gate Realty and Finance Inc.
CA DRE License #02361979 | NMLS #2776762
Principal Broker: Alan Wen | CA DRE #01812220 | NMLS #356521

Insurance Services provided by:
POM Peace of Mind Insurance Agency
CA DOI License #0N02495
GA Principal: Alan Wen | CA DOI License #0E21429