Navigating California's Insurance Challenges: Deductibles, Bundling, and the Rise of Cyber Coverage

In today's turbulent insurance market, especially in California, homeowners, business owners, and everyday drivers are feeling the strain. Premiums are rising, coverage options are shrinking, and even long-time policyholders are facing unexpected nonrenewals. Amid these challenges, many people are asking: How can I save money on insurance without exposing myself to unnecessary risk?

In a recent episode of Insurance Hour, industry expert Karl Susman tackled some of these complex issues — from how high deductibles really impact your premium to how bundling can still pay off, even when your insurer doesn't want both your home and auto coverage. Along the way, he also touched on an increasingly relevant topic: cyber insurance — a new frontier of protection for businesses and individuals alike.

Here's a breakdown of the episode's key insights and what they mean for Californians navigating today's difficult insurance landscape.

1. Can I Have a $500,000 Deductible — and Will It Save Me Money?

One listener kicked off the show with a provocative question:

"Can I have a $500,000 deductible? Will I save money?"

It's a question more and more people are asking as premiums soar. The logic seems sound — if you take on more risk yourself, your insurer should charge you less. But Susman was quick to clarify that it's not quite that simple.

"There's an aspect of diminishing returns," he explained. "At some point, the insurance carrier can't keep reducing your premium just because you raise your deductible."

In other words, while going from a $1,000 to a $2,000 deductible might produce a noticeable drop in your premium, increasing it from $10,000 to $50,000 might barely move the needle. Why? Because beyond a certain threshold, insurers can't justify the lower premium based on the small amount of remaining exposure they still carry.

2. Understanding Diminishing Returns on Deductibles

The reason deductibles stop saving you money at a certain point has everything to do with statistical risk modeling.

Insurance companies calculate risk based on data — not emotion. They know, on average, how likely it is that a homeowner will file a claim in a given year and how much that claim will cost. If your deductible is already high enough that you're unlikely to file small claims, you've already removed most of the "nuisance risk" from their balance sheet.

At that point, raising your deductible further doesn't dramatically change the company's financial exposure. The premium stabilizes, even if you double or triple your deductible.

How to Handle Persistent Insurance Agents, Rising Premiums, and the Mystery of the "Policy Jacket"

Every insurance customer has been there — your agent keeps calling to "check in," offer new policies, or "review" your coverage. It's easy to feel like you're being sold more than you need. At the same time, your car's getting older, yet your auto premiums keep climbing, and your policy documents seem to be getting shorter — not longer.

If you've had any of these frustrations, you're not alone. In this episode of Insurance Hour, host and insurance expert Karl Susman tackled these exact issues through listener questions — shedding light on some of the most common misconceptions about how insurance really works.

Let's break down his practical insights on dealing with pushy agents, understanding your policy paperwork, and figuring out why your premium might be rising even when your vehicle is losing value.

1. "My Agent Keeps Trying to Sell Me More Insurance — What Can I Do?"

The first listener question went straight to the heart of a common annoyance:

"My agent is always trying to sell me more insurance and I have it all. I'm on the do-not-call list. Where do I report him?"

Susman's response started with honesty:

"Yes — insurance agents and brokers make money by selling insurance. That's their job."

It might sound blunt, but it's true. Agents are compensated for selling policies, just like real estate agents earn commissions for selling homes or financial advisors for managing portfolios.

However, that doesn't mean every sales call is predatory. In fact, it can sometimes be a sign of diligence rather than greed.

"If your agent is offering you something new, it's possible you actually do need it," Susman said. "Because when people file claims for something they didn't have coverage for, the first thing they say is, 'My agent never offered it to me.'"

It's a fine line: when does "doing your job" become "being pushy"?

Finding the Line Between Helpful and Harassing

There's no one-size-fits-all rule, but the best approach is communication.

If you feel overwhelmed by too many sales pitches, it's okay to speak up. Susman's advice?

"Be honest and say, 'I appreciate the outreach and the offers, but please make a note not to contact me with new policy suggestions.' They will — they don't want to waste their time or risk losing a client."

He also reminded listeners that agents, like anyone in business, would rather have a satisfied customer who renews their policy than an annoyed one who leaves.

If your agent ignores your request or becomes unprofessional, you can escalate the issue — but in most cases, a polite, direct conversation will solve it.

Do Insurance Companies Really Make Money by Denying Claims? And Why Some Parents Buy Life Insurance for Their Babies

Insurance is often described as a promise — a contract that exists to protect you when life goes wrong. But for many consumers, that promise comes with skepticism.

Do insurance companies actually make money by not paying claims? And if so, how can consumers trust that their insurer will do the right thing when disaster strikes?

In a recent Insurance Hour episode, host and industry expert Karl Susman tackled these challenging questions head-on. The discussion, sparked by real listener emails, dove into some of the most misunderstood — and emotionally charged — aspects of the insurance business.

What followed was a thoughtful breakdown of how insurance companies really operate, why not every claim can or should be paid, and even why some parents choose to buy life insurance for newborns.

The Question: Do Insurers Profit from Denying Claims?

One listener asked bluntly:

"Insurance companies make money by not paying claims. How is that not a conflict of interest?"

It's a fair question — one that touches on the deep mistrust many people feel toward insurers, especially after hearing horror stories about denied claims or delayed payouts.

Susman began by acknowledging the logic behind the question:

"In a vacuum, if you had two identical insurance companies with the same policy, same client, and same claim — and one company didn't pay while the other did — then yes, the one that didn't pay would have less expense and therefore more profit."

However, that logic only applies if the claim was legitimate and the company intentionally refused to pay it.

In reality, insurance is not an arbitrary process of paying or not paying — it's governed by contracts, regulations, and actuarial principles.

Insurance Is a Contract — Not a Favor

When you buy an insurance policy, you're entering into a legally binding agreement.

"The contract you purchase from an insurance company is a legally binding document," Susman explained. "It's a promise between you and the insurance company: you pay premiums, and in exchange, they promise to pay for a covered claim."

That agreement is built on a principle known as "utmost good faith."

This means both parties — the insurer and the insured — are expected to act honestly and transparently. The consumer must disclose accurate information about their property, health, or driving record, while the insurer must evaluate claims fairly based on the terms of the contract.

Insurance Hour Q&A Finale: The Truth About Auto and Life Insurance That Most People Don't Know

As Insurance Hour wrapped up its final segment, host and insurance expert Karl Susman fielded some of the most unusual — yet surprisingly common — listener questions. From whether it's legal to drive without car insurance, to what really happens when someone dies soon after purchasing a life insurance policy, the discussion revealed just how many misconceptions the public still holds about everyday insurance.

In this final Q&A episode, Susman blended technical know-how with practical insight and a touch of humanity, reminding listeners that behind every policy and premium lies something much deeper — real protection for real people.

Let's unpack the key lessons from this episode and explore what they mean for consumers and the insurance industry alike.

Is It Legal to Not Have Auto Insurance?

One of the first listener questions raised an eyebrow:

"Is it legal to not have car insurance?"

At first glance, the answer seems obvious — of course it's illegal to drive without auto insurance, right? Not exactly.

"Believe it or not," Susman explained, "it is legal to not have auto insurance — depending on how you meet your state's financial responsibility laws."

Every U.S. state requires drivers to demonstrate financial responsibility for potential damages they might cause while operating a vehicle. Most people satisfy this requirement by purchasing auto liability insurance. But technically, that's not the only option.

The Financial Responsibility Rule

In many states, drivers can meet the financial responsibility requirement by posting a surety bond or cash deposit with the state's Department of Motor Vehicles.

For example:

• In California, you can deposit $35,000 with the DMV instead of buying a policy.

• In Florida, a certificate of self-insurance can be issued if you can prove sufficient financial resources.

• In Texas, you can post a bond jointly with at least two property owners in the state.

"You can post a bond, which is significantly less expensive than buying an insurance policy," Susman said. "And you can satisfy the financial requirement of your state by having that bond."

State Farm Requests Major Rate Hike: What California Homeowners Need to Know About the 30% Increase Proposal

For millions of Californians, the fireworks of Independence Day came with a dose of unsettling financial news: State Farm, the state's largest homeowners insurer, has filed for yet another significant rate increase — 30% for homeowners, 36% for condo owners, and a staggering 52% for renters insurance.

As CBS 8 San Diego reported, this latest filing represents one of the most dramatic proposed hikes in recent memory. It's the latest development in California's ongoing insurance crisis — one that has already seen major insurers halt new policies, drop long-time customers, and cite rising costs, wildfire exposure, and outdated regulations as reasons for their retreat.

"I hate to be the bearer of bad news on the Fourth of July weekend," said the CBS 8 anchor. "But State Farm is asking for another rate increase."

The news may have dampened the holiday for thousands of families already struggling with affordability. But before panic sets in, experts emphasize that nothing changes yet — and that the increase is not yet approved.

1. The Details: How Big Are the Proposed Hikes?

Here's what State Farm's new filing includes:

• +30% for homeowners insurance

• +36% for condo owners

• +52% for renters insurance

If approved, these increases would affect millions of California policyholders — and come on top of previous rate adjustments State Farm received earlier this year.

The company's request must first go through the California Department of Insurance (CDI) review process, which can take several months. Until then, policyholders' premiums remain unchanged.

"It's critical to understand that nothing changes today for State Farm policyholders," said Michael Soller, spokesperson for the Department of Insurance.

2. Why State Farm Says It Needs Another Increase

In an emailed statement to CBS 8, State Farm said its rate filing was necessary to cover the increased cost of doing business in California — especially after years of heavy wildfire losses, inflation, and higher reinsurance premiums.

"Rate changes are driven by increased costs and risk," the compa ...

State Farm's Proposed Rate Hikes: What They Mean for California's Insurance Market

California homeowners are once again bracing for higher insurance costs — this time from one of the state's biggest players. State Farm, which insures roughly 27% of all residential properties in California, has filed for significant premium increases across multiple policy types.

According to recent reports, the proposed hikes could reach as high as 50% for some customers — including homeowners, condo owners, and renters.

In an interview with FOX KTVU, insurance expert and Insurance Hour host Karl Susman broke down what's driving these increases, how the California Department of Insurance (CDI) fits into the process, and what the potential ripple effects could mean for consumers statewide.

The Situation: State Farm's Steep Request

State Farm's proposal includes:

• A 30% increase for homeowners policies.

• A 36% increase for condominium owners.

• A 52% increase for renters policies.

These numbers follow a turbulent year for the insurer, which already made headlines in 2023 for pausing new homeowners policies in California, citing "historic increases in construction costs and wildfire risk."

"In March, they were downgraded for their financial solvency by AM Best," Susman explained. "Then in April, they non-renewed a little over 72,000 policies. And now they've submitted a request for this increase."

The timing, he said, underscores the financial stress insurers are facing in California's current environment.

Why the Request Is So Significant

State Farm's rate filing is more than just a company-specific issue — it's a litmus test for the entire California insurance market.

With over a quarter of the state's properties under its umbrella, State Farm's pricing and availability decisions have a massive downstream effect on both competitors and consumers.

"When you have a company as large as State Farm — that has the majority of properties insured in California — it's going to have an effect," Susman noted. "If they're in that kind of financial strait, I can't imagine how the Department of Insurance wouldn't approve the increase."

The logic is straightforward: if the state denies the request and State Farm can't maintain solvency, millions of policyholders could be at risk ...

In this episode of Insurance Hour, host Karl Susman delves into the intricacies of the California insurance market. The show addresses pressing issues such as recent changes in insurance regulations, the impact of natural disasters on insurance premiums, and the rise of cyber insurance. Listeners call in with their questions, seeking advice on various insurance claims and policies. Karl provides expert insights, practical tips, and valuable information to help Californians navigate their insurance needs effectively.

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Insurance Hour is hosted by renowned insurance expert Karl Susman. Karl is a frequent guest on television stations such as ABC, CBS, Spectrum, The CW and FOX, and now his popular radio program is available online throughout California and world-wide.

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For more information about "Insurance Hour" and its programming, please contact Lara Starr at [email protected]

California's Insurance Market in 2025: Fire Maps, Ordinance & Law Coverage, and What's Next for Homeowners

If you're a California homeowner, you've likely noticed your insurance costs rising, your options shrinking, and your patience wearing thin. Between wildfire exposure, regulatory hurdles, and major insurers cutting back, the state's property insurance landscape is in turmoil.

In this episode of Insurance Hour, host and insurance expert Karl Susman tackled a flood of listener questions — from fire map confusion to coverage terms that many policyholders misunderstand.

Here's what you need to know about the state of California's insurance market in 2025 — and what the coming regulatory reforms could mean for you.

1. "Is USAA Dropping Insurance in California?"

This was the first question from a listener — and it's one many Californians are asking about nearly every major insurer.

Susman's answer was candid: while USAA hasn't officially withdrawn from the market, no carrier is writing business the way they used to.

"I don't believe there is a carrier that is not either restricting the business that they're writing or non-renewing some level of policies," Susman explained. "They're all being very particular about conditions — looking at your home, your exposures, and your risk."

In short: insurers are being more selective than ever.

Carriers are using this moment of market disruption to "clean their books" — trimming policies that they may have once accepted but now consider marginal.

If your property has older wiring, outdated roofing, or sits within a wildfire-prone ZIP code, it's at risk of being dropped or non-renewed.

The good news?

Susman emphasized that California may finally be at "the tail end" of the crisis.

"We should be seeing the new regulations coming out literally any day," he said. "And we should start to see some changes after that."

Those changes refer to reforms under the Sustainable Insurance Strategy, an overhaul of how insurers assess risk and file rates in the state.

2. "Who Is Challenging the Fire Maps?"

Next, a listener asked a question that cuts to the heart of the state's insurance crisis:

"Who is challenging the insurance fire maps to ensure that they make sense and pricing is rational based on them?"

Susman explained that there is no single fire map — and that's where much of the confusion begins.

"Fire maps are a little bit misunderstood," he said. "There is no specific fire map that everyone goes by — not the Department of Insurance, not the insurance ...

Understanding FAIR Plan Discounts and Home Hardening Rules: What Every California Homeowner Should Know

As California's wildfire crisis intensifies, homeowners across the state are turning to the California FAIR Plan — the state's insurer of last resort — for coverage that many traditional insurers no longer offer.

But even as more people join the FAIR Plan, confusion remains about how its discount system works, especially when it comes to home hardening and defensible space.

In a recent episode of Insurance Hour, insurance expert Karl Susman addressed a wave of listener questions about these topics — clearing up what qualifies for discounts, what certifications are needed, and why doing "half the list" won't earn partial savings.

If you've ever wondered how to qualify for FAIR Plan discounts or why your premium hasn't gone down despite major fire safety upgrades, this is for you.

What Is the FAIR Plan, and Why It Matters

The California FAIR Plan Association was created in 1968 to ensure that every homeowner could obtain basic fire coverage, even in high-risk areas.

It's not a state agency — it's a pool of private insurance companies collectively funding coverage for those who can't find policies elsewhere.

In recent years, however, the FAIR Plan has become more than just a "last resort." As wildfires, reinsurance costs, and regulatory delays have driven private insurers out of the market, the FAIR Plan now insures hundreds of thousands of homes once covered by standard carriers.

"The FAIR Plan exists to give people coverage when the admitted market won't," Susman explained. "But because it's heavily regulated, it doesn't have the flexibility private carriers do."

That regulation extends to its discount structure, which is governed by state rules — not just the FAIR Plan's discretion.

What Is "Home Hardening"?

Home hardening refers to construction and maintenance practices designed to make a structure more resistant to fire.

The FAIR Plan offers two main categories of discounts:

1. Home Hardening (to the structure itself)

2. Defensible Space (around the property)

Each requires homeowners to meet specific, verifiable criteria outlined by the FAIR Plan — and only those who complete all requirements f ...

Why Home Hardening Still Isn't Rewarded in California — And How the Sustainable Insurance Strategy Could Change That

It's the most frustrating paradox in California's insurance crisis: homeowners are doing everything right — upgrading their roofs, clearing defensible space, installing ember-resistant vents — and yet, their insurance rates are climbing or their policies are being canceled.

"We cut down every tree within 100 feet of our house and built a home that's as fireproof as possible," one Insurance Hour listener lamented in an email to host Karl Susman. "Concrete fiber siding, metal roof, surrounded by stone and gravel. But every agent still said no based on our address."

Even after extensive mitigation, their California FAIR Plan premium didn't budge. Why? Because, as Susman explained in this week's episode, the state's insurance system still rewards location over prevention.

Until now.

A State of Frustration

The conversation began with an acknowledgment of what many Californians already feel: anger, exhaustion, and disbelief.

"Premiums are high. Flexibility is low. It's not what anyone wants," Susman said. "And I don't want to minimize that because it is a very frustrating circumstance."

The state's private insurance market has effectively collapsed, with many major insurers either pausing new business or non-renewing policies in high-risk wildfire areas. As a result, hundreds of thousands of homeowners have turned to the California FAIR Plan, the state's insurer of last resort.

But unlike private carriers, the FAIR Plan isn't designed to be competitive.

"We're used to dealing with private insurance companies, and private companies compete based on service," Susman explained. "When you're in a situation where there are no private carriers offering new policies, there's no incentive. There's no reason for anyone to bend over backwards — because what are you going to do?"

That lack of competition has left homeowners stuck — and the FAIR Plan overwhelmed.

The California FAIR Plan: Safety Net or Strain?

The FAIR Plan Association, created in 1968, was intended to provide basic fire coverage to properties that couldn't get insurance on the open market.

It's not a state agency but rather a pool funded by private insurers. Every admitted carrier in California contributes to the FAIR Plan's financial backing, spreading the risk of catastrophic losses across the industry.

In theory, the FAIR Plan is temporary — a fallback until the market stabilizes. But in practice, it's become a permanent fixture of the insurance landscape, with enroll ...