Wildfire areas in California located in the northern part of the state and in San Bernardino County are threatened by an insidious trend, according to the Department of Insurance. The trend is for insurers of homes to drop coverage as risk assessments are evaluated and come in high.

According to the Los Angeles Times, this trend has become such a problem in recent years that a one-year moratorium on the practice was put into place on Dec. 5.

According to reports, that ban was issued to include 800,000 homes in and around 16 wildfire areas in California. The original effort included those residences placed near the Kincade fire which burned 77,758 acres in Sonoma County in October-November and the Saddleridge fire which burned 8,799 acres in October.

Now the Sandalwood and Hillside wildfire areas in California have inspired the expansion of the ban to include an additional 200,000 homes bringing the total to one million. The Sandalwood fire burned 1,011 acres in the Calimesa area of the greater Los Angeles area and was responsible for the death of two mobile home park residents in October. The Hillside fire of San Bernardino burned 200 acres and threatened 1200 homes before containment in early November.

The Uncertain Future of California Homeowners Insurance

The crisis of bailing insurance companies leaves homeowners who have lost their homes to fire in a desperate position when it comes to recovery. If burned-out residents want to reconstruct homes from ashes or new residents want to come into an area and build, the unavailability of policies becomes prohibitive.

According to the Los Angeles Times article, the prohibition which keeps insurers from dropping policies on homeowners that have suffered the complete loss of a home extends to property near to fire regions but not immediately threatened. This legal step by the Office of the Insurance Commissioner is an effort to stabilize a potentially volatile situation within the California housing market.

Claims filed with insurance companies from fire losses in the Golden State have been in the billions of dollars over the last few years. A report generated from the Department of Insurance in 2018 revealed that complaints from citizens living on land bordering urban and wilderness areas regarding policy dropping or premium rate hikes tripled between 2010 and 2016.

Between 2015 and 2018, there was reportedly a precipitous drop in the issuance of new homeowner policies in the California counties with the most wildfire risk. In equal measure, there were long-standing policies up for renewal which were declined by the thousands.

Many of the communities affecting by this trend were reportedly forced to turn to the coverage offered by the California Fair Access to Insurance Requirements also known as FAIR. This insurance is offered by the State and is cheaper, consists of very skeletal coverage, and is an operation of last resort for those declined homeowners due to risk level. It was created in 1968 after brush fires and rioting has caused the loss of insurance for many state residents.

This article is not legal advice. It is presented
for informational purposes only.