As Bay Area homeowners face rising premiums, insurance companies demand costly home upgrades

SAN FRANCISCO (KGO) -- Many Bay Area homeowners facing rising insurance premiums are also being asked to pay for costly upgrades before they can get or keep coverage, according to insurers and industry professionals.

The demands come as rebuilding costs rise due to higher labor and material prices. If a home is now considered "high value" based on replacement cost, insurers may require new safety measures, such as a gas shutoff valves, to reduce potential losses.

Jerry Becerra, an insurance broker, said rising property values have changed what insurers expect from policyholders.

"In San Francisco, a teardown is a million dollars. You used to get a property for $500,000, and it wouldn't have required it on a property of that value," Becerra said.

Some requirements overlap with local building codes. In Contra Costa County and Berkeley, earthquake sensor devices are required for any new construction or significant renovation. The devices cost about $1,500 per meter. Insurers are also increasingly focused on preventing water damage, often requiring homeowners to install water shutoff valves.

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While earthquakes are relatively infrequent, water leaks are common, and insurers may deny claims if they determine damage resulted from neglected maintenance.

"What we're seeing, more houses are having major leaks, many problems in walls, behind toilets, in showers etc. And they're not seeing them in time until there is damage to the structure," said Christopher Johnson of Legend Plumbing and Drain.

In extreme cases, water damage can be financially devastating.

"This building actually had a flood from a valve that failed in the first floor and the water wasn't shut off for a couple of days. The owners were away and so at least over $100,000 worth of damage," said Carl Gavey, a condo owner.

David Mendoza of Legend Plumbing and Drain said insurers are increasingly asking for smart water shutoff devices that monitor usage and automatically stop leaks.

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"It learns all your water habits. It goes into learning mode for about two weeks, and then from there it will tell you how much water you're using. And if it detects excess water, it will alert you, and it will shut itself off," Mendoza said.

Those systems typically cost between $1,600 and $2,000, including installation. Beyond interior systems, insurers are also scrutinizing properties from the outside, sometimes using drones to assess risk factors, such as wildfire exposure.

"The drone technology certainly is causing some people some distress," Becerra said.

In addition to wildfire-related improvements, insurers often require roof upgrades and the replacement of outdated electrical systems, including knob-and-tube wiring.

Because of the growing list of requirements, real estate agents are urging buyers to secure insurance before committing to a purchase.

"If you know that your insurance broker will not accept a home that has say a roof that is older than 25 years or plumbing older than 25 years, when you receive the disclosure package on the home you can go in eyes wide open understanding that that is not going to be an insurable property," said Gabrielle Bunker, a real estate agent with Compass.