After a historic year of wildfires, California property owners in fire risk areas are finding it more difficult to get affordable insurance –and in some instances, any coverage at all.
Several major insurance companies have stopped writing new policies or renewing plans in the state’s most fire-prone areas.
Earlier this month, California Insurance Commissioner—Dave Jones—released a report in which he addressed the issues of fire insurance availability and affordability. The Department of Insurance has seen a sharp increase in the complaints, evidence, and feedback from consumers, consumer groups and public officials that homeowners insurance in susceptible areas is increasingly difficult to obtain and if available, is unaffordable to many that need it. Between 2010 and 2016, the most fire-prone zip codes made up more than 60 percent of these complaints.
Insurance companies are increasingly using computer models to assess the risk of fires for individual homes and deciding that homes in some areas are too high of a risk. Jones expects that as insurers update their risk models, they will identify more areas as high risk. Thus resulting in an increased likelihood of more non-renewals and more premium increases. This has prompted the need for the Legislature to act now.
Nearly half of the counties in California already have housing rated at high or very high fire risk. The issue of available and affordable insurance after wildfires is not new. The California Legislature allows insurers broad latitude to decide whether and where to write fire insurance. This report recommends a series of new laws to ensure property owners can still obtain insurance.
Jones has also directed the Department of Insurance to undertake its own in-depth analysis of the scope of the availability and affordability issue and develop proposed solutions to address these problems.
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