Valuetainment - “Real Estate Industry is SHAKING”- California Approves State Farm Homeowners Insurance Rate Increase

00:00:00.660 California's obviously a place that I lived in for 24 years.

00:00:05.440 Yesterday, Giancarlo asks Tom,

00:00:07.280 so did you ever live in California?

00:00:09.220 He says, my entire life, growing up.

00:00:11.320 And then you lived there as well for 18 years.

00:00:13.860 So we love the state.

00:00:14.760 Guy Manex me saying, what problem do we have with California?

00:00:17.400 Don't you realize that this is the most incredible climate in the world

00:00:20.460 with incredible benefits?

00:00:21.380 I said, yes, yes, yes. 0.91

00:00:23.200 But your policies suck, and they're pushing a lot of good people out, 0.99

00:00:26.760 especially with this one. 0.99

00:00:27.620 Let me read it to you.

00:00:28.280 California approved 17% increase, rate increase, for State Farm.

00:00:33.300 Okay?

00:00:33.920 17% rate increase for State Farm.

00:00:37.480 So this 17% rate increase for homeowners insurance,

00:00:41.300 effective June 1st, after the insurer requested a 22% hike,

00:00:46.300 they said 22, California agreed to 17,

00:00:49.080 citing a dire situation post-LA fires.

00:00:52.260 Insurance Commissioner Ricardo Lara stated,

00:00:54.000 we are in a statewide insurance crisis affecting millions of California

00:00:58.260 years, calling it a tough compromise.

00:01:00.120 Consumer watchdogs, Carmen Balber criticizes the decision,

00:01:03.400 saying it adds insult to injury for homeowners facing delayed or lowball claims.

00:01:08.120 State Farm financial distress was acknowledged by an administrative judge

00:01:10.700 who found a company that is experiencing extraordinary financial stress,

00:01:14.100 coupled with surplus depletion that threatens ongoing business operations.

00:01:18.440 Laura noted State Farm must justify its financial conditions and detail its recovery plan at a fall hearing.

00:01:26.480 And this is for homeowners insurance.

00:01:29.100 For renters, you ready?

00:01:30.300 I'm going to let Tom give you guys what the renter's insurance increased by.

00:01:33.680 Go ahead, Tom.

00:01:34.760 And ready for this?

00:01:36.460 It goes up 15% for renters and condos.

00:01:40.700 However, 38% if it's not a condo.

00:01:44.800 So condos got their own little lane,

00:01:46.060 but they gave State Farm permission to raise it 38% for renter's insurance.

00:01:49.600 I'm renting a three-bedroom house.

00:01:52.480 Yeah, three bedrooms, two baths.

00:01:53.200 From somebody, my renter's insurance, I was paying two grand a year.

00:01:56.800 Now I'm paying $2,800 a year.

00:01:58.480 That is right.

00:02:00.260 You're up to $2,800.

00:02:01.380 So that $800 is like a car payment.

00:02:04.580 That's huge.

00:02:05.760 And what's very interesting to me is I dug into this,

00:02:08.700 and the administrative law judge, Carl Frederick Seligman,

00:02:12.520 he said, well, this is because of weather events.

00:02:17.120 Another devastating extreme weather event would nearly eliminate State Farm surplus.

00:02:22.360 Their surplus was $2.24 billion.

00:02:24.380 Now, this is what an insurance surplus is.

00:02:26.800 An insurance surplus is the money they have to set aside

00:02:29.200 because someone's car is going to get stolen,

00:02:31.500 someone's car is going to be in an accident,

00:02:33.800 or, you know, you're going to have a fire in your kitchen,

00:02:36.100 no one gets hurt, but you've got to rebuild part of your house.

00:02:38.140 That is what insurance is for.

00:02:40.120 And so State Farm, when they sell X number of policies,

00:02:43.220 they have to keep putting money in a savings account to cover all this stuff.

00:02:47.120 They had $2.6 billion in it until Palisades burned down.

00:02:51.260 And all the fires in California led by the Palisade,

00:02:53.920 there was also other ones that were just horrifying.

00:02:56.440 And now they're down to $620 million.

00:03:00.000 So they put $1.6 billion, whoosh, out into people's hands.

00:03:04.860 Now, those people deserve it because they paid for a policy with State Farm,

00:03:08.240 and they suffered a terrible loss.

00:03:10.280 Well, now the judge says, hey, they're down to $620 million,

00:03:15.660 and if there's another weather-related event, boy, that would eliminate their surplus.

00:03:19.980 What's he blaming, Vinny?

00:03:21.020 He's blaming weather, weather event.

00:03:24.320 He's not looking at the empty reservoirs, the fire department equipment that wasn't in working order,

00:03:32.320 hydrants that weren't working, and also decisions that they made about not asking PG&E to clear brush and things.

00:03:40.960 No one's looking at that.

00:03:42.120 Oh, it's just the weather.

00:03:42.920 So it basically is taking the bureaucrats, you know, Richard, Laura, and them, out of it

00:03:48.420 and not putting it on people that says, wait a minute.

00:03:51.580 Okay, so we got this situation, and you're right.

00:03:54.920 With only $620 billion, these people, excuse me, a million dollars,

00:04:00.260 these people could be in deep water, State Farm.

00:04:02.800 But no one's looking at what was going on, PBD, before all the public policies

00:04:07.560 and the mismanagement of things that led it to be such a devastating era.

00:04:12.060 And when all the neglect was there, what happened when the wind and fire came to Palisades?

00:04:16.800 Ba-woosh.

00:04:17.460 And the fire department was unarmed to do anything about it.

00:04:19.960 Here's a question, though, Tom.

00:04:20.820 All that stuff we're talking about, that's not State Farm's problem.

00:04:24.440 Okay?

00:04:25.120 State Farm is there to insure your homeowners.

00:04:27.200 Now, here's the problem.

00:04:28.100 You've got to realize with State Farm.

00:04:28.680 With good market share, doing a good job, a lot of customers.

00:04:30.740 When you look at State Farm, State Farm, he says, right now, this is part of the story,

00:04:35.980 the administrative judge, independent administrative judge, non-binding order,

00:04:41.300 which found State Farm is in serious financial stress

00:04:43.840 and recommended a $400 million cash infusion from its parent company.

00:04:48.220 Their parent company is, I think, State Farm Automobile and Insurance Company,

00:04:51.840 something, something like that.

00:04:53.120 Then you have State Farm.

00:04:54.180 Why do they need $400 million infusion?

00:04:56.320 They're not making money.

00:04:57.720 So guess what?

00:04:58.720 They're saying 21%.

00:05:00.120 They lower to 17%.

00:05:01.780 California homeowners can't afford that.

00:05:03.480 15% for renters in a condo.

00:05:06.140 38% for renters in a house, which in California, in many cases,

00:05:10.280 you're renting a house from somebody else.

00:05:11.860 You're paying that 38%.

00:05:13.040 That's an increase on top of what it already is.

00:05:16.120 But guess what the alternative is?

00:05:17.900 Complain about it.

00:05:18.920 State Farm leaves.

00:05:19.860 State Farm leaves.

00:05:20.960 The mortgage doesn't get approved.

00:05:22.300 The mortgage doesn't get approved.

00:05:23.600 The real estate industry goes into shambles.

00:05:25.480 The real estate industry goes into shambles.

00:05:27.400 And the tweet that Vinny just sent, Rob, if you can pull this one up,

00:05:30.500 this is a tweet that Vinny just sent from Mario in the fall.

00:05:32.800 This is what it takes to afford to buy a house today in America.

00:05:35.140 Check this out.

00:05:35.720 How crazy is that, Pat?

00:05:36.860 For a three-bedroom house, this is what you need to make to be able to afford

00:05:40.440 a three-bedroom house in America.

00:05:41.780 Zoom in a little bit, Rob, if you could.

00:05:43.080 If you could zoom in a little bit.

00:05:44.200 Look at that.

00:05:44.800 California.

00:05:45.220 Jeez.

00:05:45.700 210.

00:05:46.060 There's only one state that's higher than that, and it's Massachusetts, 216.

00:05:49.100 Weird.

00:05:49.300 New York's 190.

00:05:52.200 You got Washington, 175.

00:05:54.020 Montana, 177.

00:05:55.200 Utah, 169.

00:05:56.260 Idaho, 163.

00:05:58.120 And then you go lower.

00:06:00.000 Jersey's 57.

00:06:00.980 Connecticut's 44.

00:06:02.360 Rhode Island's 41.

00:06:03.840 Texas is half.

00:06:04.420 Hawaii.

00:06:05.200 Texas is half of California.

00:06:07.240 Gosh, why are people driving there?

00:06:08.840 Just by moving from California to Texas, you save 55%.

00:06:14.080 52%.

00:06:15.560 Alaska's 122, but go to Hawaii, 229.

00:06:18.300 229, and look where Florida's at, 125.

00:06:21.840 Do you think there's a reason why people from New York are moving to Florida?

00:06:24.700 There's a reason for that.

00:06:26.080 But remember, the fear here lies where?

00:06:29.340 If you don't allow State Farm to make money in your state, they will say goodbye, and your

00:06:36.900 real estate industry, the realtors are sitting there shivering because they saw data that came

00:06:42.320 out last year, the fact that 7% of mortgages and sales weren't closing because the people

00:06:48.300 that were buying the house were not qualifying for the homeowner's insurance, and they're

00:06:52.100 like, man, I can't afford to pay this homeowner's insurance.

00:06:54.380 I'm out.

00:06:55.040 Adam, your thoughts on this?

00:06:56.540 Well, if you live in California, the number one thing that comes to mind to me is the math

00:07:00.900 ain't mathing.

00:07:02.540 How the hell can you afford?

00:07:03.720 Don't go to Vinny, but keep going.

00:07:04.840 Okay, go to Vinny.

00:07:05.560 I'm sorry.

00:07:06.200 I'm not going to make you do math.

00:07:07.780 I got you.

00:07:08.580 How old are you, Vinny?

00:07:09.320 Plus one.

00:07:10.760 48.

00:07:11.420 Keep going.

00:07:12.080 Keep going.

00:07:12.580 But just the math ain't mathing.

00:07:14.100 So, you know, we talked about this, I don't know, maybe six months ago about everyone's

00:07:18.360 so focused on the minimum wage.

00:07:19.720 What's the minimum wage?

00:07:20.520 What's the minimum wage?

00:07:21.780 Forget about the minimum wage.

00:07:22.780 What is the living wage?

00:07:24.380 I don't know, Robert, if you can pull that up real quick, but I think the living wage,

00:07:27.900 you know, they're fighting for like 20 bucks an hour in California, whatever they're talking

00:07:30.720 about.

00:07:31.420 But the living wage to be able to live in California, just live, is $28 per hour, which would

00:07:38.060 math it out for me, what, $56,000 a year, the median income.

00:07:43.560 So here's what I'm seeing in terms of where people are moving.

00:07:48.200 You know, now there's sort of like a regress of people moving out of Florida because, and

00:07:52.940 even moving out of Texas, sort of the reversion to the mean.

00:07:57.480 But here's the challenge that I think people, companies, states are going to have.

00:08:01.920 Five years ago, 10 years ago, you know, remote work, work from home, work from anywhere

00:08:06.220 really wasn't a thing, especially before COVID.

00:08:09.520 Now it is.

00:08:10.800 So you don't have to live in the place where you can make the most income.

00:08:17.180 So a lot of people are basically looking at it saying, all right, it costs how much to

00:08:20.860 live in Hawaii, in California, what have you?

00:08:24.040 I could just go move to Tennessee or Texas, but get a job in California, get a job in New

00:08:30.080 York, work remote, do the math.

00:08:31.560 The number one thing that I would say to people is this, as much as you can, keep your flexibility

00:08:39.100 high and your overhead low.

00:08:41.080 If you can keep your overhead very low and stay flexible, especially these days, if you're

00:08:45.560 able to work from anywhere, you could survive this massive increase in the cost of living

00:08:53.000 in America today.

00:08:54.100 Yeah.

00:08:54.300 I mean, this is scary for what's going on with California.

00:08:56.200 I mean, when you're looking at wanting to live there, people have to answer that basic

00:09:00.420 question.

00:09:01.220 Would I rather take that money and paying taxes to California thinking it's going to get

00:09:05.980 better?

00:09:06.300 Or would I rather move to a Nevada, which is 70K less, that's a 33% savings or Arizona,

00:09:12.620 33% savings or Texas, 50% savings and use that additional money to give to my kids for college,

00:09:19.320 for future investment, for future business, for my own retirement.

00:09:22.100 Is your decision you're making today allowing you to take care of the older version of you

00:09:26.960 one day you'll be?

00:09:28.140 You're one day going to be 70 years old.

00:09:29.920 Is a 70-year-old version of you happy with the decisions you're making on the way you're

00:09:33.720 managing your finances?

00:09:34.940 Only you can answer that question.

00:09:36.140 The rest of us can't.

00:09:37.380 That comes to you.

00:09:38.120 Adam, I want to continue to the next story.

00:09:39.400 I want to ask you a question.

00:09:40.200 Yeah.

00:09:41.260 The cost of living as a man, does it increase or decrease as you get older?

00:09:46.620 What do you think?

00:09:47.520 It gets higher.

00:09:48.700 Not even a question.

00:09:49.500 Not even a question.

00:09:50.140 So I see all these people on my neck that ask me questions.

00:09:52.660 Hey, Adam, I'm 28.

00:09:53.580 I'm 32.

00:09:54.100 I haven't started investing yet.

00:09:55.640 I haven't really started saving it.

00:09:56.740 I'm really trying to figure this thing out.

00:09:58.300 And I ask them, do you think that life is going to get cheaper or more expensive as

00:10:02.100 you hit 35, 40?

00:10:03.680 And they go, that's a good question.

00:10:05.160 Life's only going to get more expensive.

00:10:06.840 So if you don't figure this out now in your 20s and 30s, by the time you're 40 and 50,

00:10:11.180 What was that word you used, Tom?

00:10:11.440 Can you bring back that word you used?

00:10:13.340 I don't think he heard anything you said.

00:10:15.000 The caboose?

00:10:15.840 Caboose.

00:10:16.160 The caboose word went over here.

00:10:18.500 Well, as you guys know, in two weeks, Mondays at the 26th is Memorial Day.

00:10:23.300 And, you know, everybody, it's, and I get it.

00:10:25.200 It's time off, barbecues, you know, we get to hang out, we get to drink.

00:10:28.260 I mean, I'm not drinking, but, you know, it is, that day isn't all about that.

00:10:31.940 It's remembering the brave men and women who fought and fell to give us every single freedom,

00:10:38.020 every single right that we have.

00:10:39.560 And at Valuetainment, we don't take that freedom lightly.

00:10:42.020 We know it's brought with blood and encouraged.

00:10:44.580 So, we got something on Memorial Day.

00:10:47.140 We have a Memorial Day collection right here.

00:10:49.440 We have the hats, Army, Navy, what else?

00:10:53.280 Air Force.

00:10:54.340 We got it all.

00:10:55.440 So, if you guys want to go to that section, and as the video is playing, we have a,

00:11:00.860 if you purchase anything in a Memorial Day package, you get a sticker pack of every single branch.

00:11:06.500 And you got a free American flag keychain.

00:11:10.300 If you go to vtmerch.com, that's where it's going to be.

00:11:13.820 Go to vtmerch.com and place your order, folks.

00:11:16.180 And if it isn't for you, if you know somebody that has or served in the military, send it to them.

00:11:22.060 On top of that, Rob, did I send you that picture?

00:11:23.980 This puts the biggest smile on my face.

00:11:25.760 This is one of the best things about the Future Looks Bright brand is you get to put a smile on somebody else's face.

00:11:31.140 Here's somebody that bought the lemon campaign that we did, zest it forward, and send it to someone.

00:11:36.640 And look what it says here.

00:11:37.660 I love that smile.

00:11:39.000 Mother's Day can feel different when the kids are grown and the nest is empty, but your journey as a mom doesn't end.

00:11:44.500 It just evolves along with you.

00:11:45.980 Let's take a moment to celebrate strength, wisdom, sense of humor, and the love of the empty nester moms who continue to nurture, support, and inspire.

00:11:52.480 Even from afar, we deserve to be acknowledged and celebrated every day.

00:11:56.780 How awesome is that?

00:11:58.000 And look at the smile she's got there, Rob.

00:12:00.080 If you want to go to the next pages, she's got the box, she's got the card, she's got the video, she's got the hat.

00:12:05.160 So if you're somebody that's saying, I was never in the military, but you know, make a list of a handful of people.

00:12:10.560 Make their day.

00:12:11.360 Send something to them.

00:12:12.760 Put a smile on their faces.

00:12:14.640 Sometimes we just need to, you know, one of the ways to cheer yourself up is make somebody else's day.

00:12:20.360 It's always been my way of doing it.

00:12:21.600 If I'm in a bad mood, I'm like, let me find a way to make somebody else's day.

00:12:24.380 I feel better about it.

00:12:25.300 So go place an order, zest it forward, make someone's day by visiting vtmerch.com.

00:12:32.800 If you enjoyed this video, you want to watch more videos like this, click here.

00:12:35.560 And if you want to watch the entire podcast, click here.

00:12:38.340 All right.

00:12:38.780 So muy bien.

00:12:39.240 Well, thank you.

00:12:39.880 All right.

00:12:40.800 Thank you.

00:12:41.840 And let's get the time out.

00:12:50.480 Let's see.

00:12:52.580 Bye.

00:12:54.760 Bye.

00:13:03.800 Bye.

00:13:04.400 Bye.

00:13:04.960 Bye.

00:13:05.000 Bye.

00:13:05.620 Bye.

00:13:05.860 Bye.

00:13:06.160 Bye.

00:13:07.040 Bye.

00:13:07.660 Bye.

Valuetainment - May 15, 2025

“Real Estate Industry is SHAKING”- California Approves State Farm Homeowners Insurance Rate Increase

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