Should you waive the insurance contingency when buying a hillside home in Los Angeles?

In most cases, no. Several major carriers have stopped writing new homeowners policies in California, and hillside and canyon properties in the Hollywood Hills, Bel Air, Encino, and Topanga are the hardest to place. If you waive the contingency and no carrier will quote the home at a premium you can carry, your lender won't fund the loan and your deposit, typically 3% of the purchase price, is on the line. Get an insurance quote before you write the offer, not after.

In a competitive market, waiving contingencies is how buyers win. Shorter timelines, fewer outs, a cleaner offer. We coach our own buyers on exactly this.

But there's one contingency we tell hillside buyers not to touch until they have real numbers in hand: insurance.

On a home in the flats of Beverly Hills or Hancock Park, insurance is usually a phone call. On a canyon or hillside home in the Hollywood Hills, Outpost Estates, Bel Air, or Topanga, it's now one of the hardest parts of the entire transaction. Waiving that contingency without a quote in hand is how buyers lose six-figure deposits.

WHY INSURANCE BECAME ITS OWN CONTINGENCY

For years, insurance lived quietly inside the general investigation contingency. Nobody thought about it because anyone could get a policy.

That changed. State Farm stopped accepting new homeowners applications in California in May 2023. Allstate had already pulled back, and The Hartford followed in early 2024. The California Association of Realtors responded by building a standalone insurance contingency into the residential purchase agreement, separate from your general investigation contingency, precisely because insurability now kills deals on its own.

The map changed too. CAL FIRE's updated Fire Hazard Severity Zone maps, released in early 2025, expanded the Very High zones across Los Angeles, pulling in streets that were never flagged before. A home that insured easily when the current owner bought it may sit inside a Very High zone today. You can't rely on how the neighborhood was treated five years ago, and neither can your carrier.

Here's the part most buyers miss: the default investigation period is 17 days, and in fire-zone areas, getting a real quote can take two to three weeks. The timeline barely fits even when you don't shorten it. Waive it entirely and you're betting your deposit that a carrier will say yes.

WHAT YOU'RE RISKING WHEN YOU WAIVE

The math is blunt. On a $4M purchase, a standard 3% deposit is $120,000.

If you waive the insurance contingency, go non-refundable, and then discover that no carrier will write the home at a premium you can live with, you have two bad options: close anyway and absorb whatever coverage costs, or walk and forfeit the deposit.

And if you're financing, there's a third problem. Your lender won't fund without an insurance binder. Everything else can be perfect, appraisal in, loan approved, inspections clean, and the deal still dies at the closing table because coverage never materialized. Failure to get insurance doesn't fall under your loan contingency, so waiving the insurance contingency leaves you with no protection at all.

Here's how it plays out. A buyer wins a multiple-offer situation on a canyon home by waiving everything, releases the deposit, and starts shopping for coverage in week two. The only admitted carrier willing to look at the street declines after its inspection. The FAIR Plan will write it, but the rebuild cost is $4.5M and the FAIR Plan caps out at $3M, so now they're assembling a FAIR Plan plus DIC package while the closing date bears down. The lender won't sign off on the structure in time. Every day of delay is a per-diem penalty, and canceling means walking away from the deposit.

Agents across Los Angeles can tell you about escrows that collapsed exactly this way in the last two years. It's no longer a fringe scenario, and it's not limited to Topanga. We've seen it in the Hollywood Hills, the Encino hillsides, and parts of Bel Air that most buyers still think of as easy to insure.

WHAT COVERAGE ACTUALLY LOOKS LIKE IN THE HILLS IN 2026

If you're buying in a Very High Fire Hazard Severity Zone, here's the current landscape:

• Admitted carriers are selective. The handful still writing new business in brush zones underwrite hard: roof type, defensible space, slope, access, and distance to hydrants all matter. Fire-hardened homes get quotes that others don't.
• The FAIR Plan is the fallback, with a ceiling. As of January 1, 2026, the California FAIR Plan's dwelling limit doubled from $1.5M to $3M per structure. That helps, but plenty of hillside homes in this market replace for well above $3M, which means pairing the FAIR Plan with a difference-in-conditions (DIC) wrap to cover what the FAIR Plan doesn't.
• Premiums are real money. FAIR Plan base premiums on a $2.5M dwelling in a Very High Fire Hazard Severity Zone commonly run $6,800–$9,200 per year, and a 35.8% average rate increase filed in late 2025 is pending with the Department of Insurance. On larger hillside estates placed through surplus lines carriers, $30,000–$60,000 per year on a $5M home is not unusual.
• More buyers are landing in the non-admitted market. Surplus lines homeowners policies in California surged from roughly 50,000 in 2023 to about 320,000 in 2025. These policies work, but they price differently and aren't backed by the state guarantee fund, so your lender will look at them closely.

None of this means hillside homes don't sell. They sell every week, and views, privacy, and architecture are exactly why our clients want them. It means insurance is now a line item you underwrite before you offer, the same way you'd underwrite the roof or the foundation.

HOW TO COMPETE WITHOUT GOING IN BLIND

You can still write an aggressive offer on a hillside home. Here's how we structure it with our buyers:

• Get an indicative quote before you write the offer. A good independent broker can pre-screen the address in a day or two: brush score, claims history on the home, and which carriers will even look at it. That's your green light or your warning.
• If you keep the contingency, set real terms. The contingency can specify a maximum acceptable premium and minimum coverage. That protects you from "technically insurable at $70,000 a year."
• Shorten it instead of waiving it. A 10 to 12 day insurance contingency backed by a broker already working the file reads nearly as strong as a waiver, without the exposure.
• Budget the premium into your carrying costs. On hillside properties, insurance can rival property tax as a monthly line item. Know that number before you fall in love.
• If you're paying cash, don't skip the exercise. No lender will force the issue, but an uninsurable home is your risk to carry, and the next buyer's insurance problem becomes your resale problem.

This is exactly the kind of question we walk our buyers through before we ever write an offer. Which ZIPs are getting flagged, which carriers are still quoting the canyons, and what the realistic number looks like for the specific street you're bidding on.

One note for sellers: if you own a hillside home, this cuts the other way. A buyer who waived their insurance contingency without doing the homework is a buyer whose escrow can still fall apart at funding. When we represent hillside sellers, we vet the buyer's insurance plan before recommending an offer, because a slightly lower offer with coverage already lined up is often the stronger one. Smart hillside sellers go a step further and get their home pre-quoted before listing, so every serious buyer gets a real number on day one instead of a three-week scramble in escrow.

FREQUENTLY ASKED QUESTIONS

Is the insurance contingency separate from the inspection contingency in California?

Yes. The current California residential purchase agreement includes a standalone contingency covering the availability and cost of homeowners and fire insurance, separate from the general investigation contingency. They're removed separately, so removing your inspection contingency doesn't automatically waive your insurance protection.

Will the California FAIR Plan cover a luxury hillside home?

Partially. As of January 1, 2026, the FAIR Plan covers up to $3M in dwelling coverage per structure, up from $1.5M. For homes that would cost more than that to rebuild, buyers typically pair the FAIR Plan with a difference-in-conditions policy from a private carrier to fill the gap.

How long does it take to get an insurance quote on a hillside LA home?

In brush and canyon areas, plan on one to three weeks for a firm quote, because carriers often order inspections or wildfire risk scoring before committing. In the flats, it can be a same-week phone call. Start shopping before you write the offer, not after you open escrow.

Can I lose my deposit if I can't get homeowners insurance?

Yes, if you've waived or removed the insurance contingency and then can't close. Your lender won't fund without proof of coverage, and failure to obtain insurance is not covered by the loan contingency. At that point the standard liquidated damages clause puts up to 3% of the purchase price at risk.

Do all-cash buyers need an insurance contingency?

There's no lender forcing the issue, but we still recommend confirming insurability before removing contingencies. You'd be carrying the wildfire risk on the asset yourself, and an uninsurable or barely insurable home is harder to sell later.

Waiving contingencies can win you the house, but on a hillside home, the insurance contingency is the one that protects your deposit from a problem no inspection will catch. Get the quote first, then decide how aggressive to be. If you'd like the same kind of market read we share with our clients every month, sign up for Real Brief, our monthly insights into the LA luxury real estate market, delivered straight to your inbox.

Alexis Ramos and Luke Abbott are the founders of Ramos & Abbott Homes, a luxury real estate team with Sotheby's International Realty in Beverly Hills. Together they specialize in architectural and historic homes, new construction, and income properties across West Hollywood, Hancock Park, Hollywood Hills, Beverly Hills, Fairfax District, Sunset Square, and Spaulding Square.