Californians Having Trouble Finding Insurance, We Can Help!
Recently released data in California shows that insurance companies have declined to renew almost 35,000 homeowner insurance policies in wildfire prone areas since the state started collecting this data in 2015.
The data did not specify how many of these homeowners managed to find another policy elsewhere or how much of an increase they had to pay to gain coverage, but it clearly shows how difficult it can be for Californians who live in high risk wildfire areas to find insurance coverage.
While California did not collect this data before 2015, these numbers are a good indicatior of dramatic premium increases and outright cancellations due to the risk that wildfire presents to homes in certain areas. Industry experts, lawmakers and industry regulators are concerned about the effect wildfires are having on insurance premiums.
Insurers Requesting Premium Increases
Insurance companies are requesting premium increases at an alarming rate. At a recent hearing, Joel Laucher, an insurance department consultant, informed lawmakers that insurers are requesting premium hikes “in record numbers,” according to a recent Los Angeles Daily News article. Laucher stated that the insurance department had received 25 requests for rate increases in 2015, compared with 69 in 2018. He feels even more requests are likely this year.
However, insurance industry representatives did note that the number of non-renewed policies has remained pretty steady over the years and that there are still numerous insurers offering policies in these high-risk areas.
Insurance companies paid out huge sums in both 2017 and 2018 due to wildfires but claim they are still offering policies in many of these areas. “Insurers remain committed to covering homes in rural and urban zones, despite paying out more than $26 billion in claims from the 2017 and 2018 wildfires. Those claims payments will rebuild and revitalize these communities,” Rex Frazier, president of the Personal Insurance Federal of California, and Mark Sektnan, vice president for the American Property Casualty Insurance Association, said in a recently released joint statement.
It’s Going to Get Worse
Despite these promises, many California homeowners have seen their policies cancelled or premiums increase dramatically. The data regarding non-renewals show that 33,000 policies were not renewed in ZIP codes that were hit by major fires in 2015 and 2017. The data does not currently include non-renewals related to the Redding and Paradise fires last year.
Insurance regulators warn that non-renewals will most likely increase next year as the data from those fires is taken into account. “This data should be a wake-up call for state and local policymakers that without action to reduce the risk from extreme wildfires and preserve the insurance market, we could see communities unraveling,” said state Insurance Commissioner Ricardo Lara in a recent statement.
As more non-renewals hit the books, many people in high-risk fire areas are buying insurance through the FAIR plan which is the insurer of last resort in California. The FAIR plan guarantees insurance coverage to everyone, even to people in high fire-risk areas. However, these plans do come with restrictions, coverage is limited to $1.5 million and the policy only covers specific perils which are limited to:
- Fire
- Lightning
- Internal explosion
- Smoke
- Vandalism or malicious mischief – This coverage is optional
- Windstorms, hail, explosion, riots and civil commotion, aircraft, vehicular damage, volcanic eruptions – This is also an additional coverage which will increase your premium
We Can Help
We took a deep dive into the homeowners insurance market in California and have found multiple solutions to insuring your home, even if it is located in a high-risk fire area.
Contact us today at HomeInsuranceKing.com to get a California homeowners insurance quote. We are confident that we can help you find coverage for your home, regardless of where it is located. If you prefer to speak with our California home insurance agents directly, please call us at 855-976-2656. We look forward to helping you!