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California is growing increasingly ravaged by wildfires—bigger and more destructive over time, in large part due to the effects of climate change—and California fire insurance policies are being hit hard in response because of California wildfire damage.
A quarter of a million California fire insurance policies were discontinued in 2019, a 31% increase compared to 2018, per the California Department of Insurance.
In mid-October, it was made public how many non-renewed California fire insurance policies there were in 2019, combining both homeowners who chose not to renew their policies and insurers who decided on their end not to renew the policies on certain homes.
For those who live in the more wildfire-prone areas of the state, losing their insurance can be devastating.
“I have heard your nightmarish fears of losing everything that is precious to you despite your heroic efforts to protect your homes, families, and communities from wildfires, and the unfathomable frustration endured over losing your insurance anyway—despite all the actions you took to reduce the risk and stay insurable,” said Ricardo Lara, the state’s insurance commissioner, in a statement.
The widespread non-renewals of California fire insurance policies across the state may spark a significant shift in how insurance is done in the Golden State.
“The people of California are strong and resilient, but we cannot just continue business as usual,” said Lara. “Through the combined efforts of California’s people, our state and local government leaders and the insurance market, together we can reduce the risk of wildfire spread and help reinvigorate our state’s economy.”
Wildfires in California are becoming increasingly destructive, sometimes destroying thousands of structures and killing dozens of people. Entire communities have been razed to the ground, and rebuilding is a difficult prospect—especially when there is significant concern about whether it might happen again, and whether or not insurance will actually pay out.Or, as the case may be for tens of thousands of homeowners, whether or not they’ll even have insurance.
“Insurance companies don’t want to give up customers ever—at all,” Mark Sektnan, vice president of the American Property Casualty Insurance Association, told CBS MoneyWatch. “But if a homeowner’s policy is so underpriced that it doesn’t reflect the growing risk fo that area then you have to kinda make a decision.”
A few main areas of California that were the biggest targets of canceled insurance policies. These include Southern Sierra northeast of Bakersfield, Northern California, and several communities a little to the north of Los Angeles, according to state data. However, data did not disclose which insurance companies dropped those policies. However, major property insurers for fire insurance or homeowners insurance operating in California include State Farm, Farmers, Liberty Mutual, and Allstate.
Californians have struggled with insurance for years. The largest insurance market in the country (and the most populous state) allows insurers to raise their rates anytime. If the increase is 7% or higher, however, state law requires that insurers face public hearings. To avoid this, insurers regularly increase rates by 6.9%. These increases have cost homeowners hikes of hundreds of dollars in their premiums.
Some state regulators are working to combat the growing California fire insurance crisis. Lara, for instance, says that his office is working on a policy that would give discounts to homeowners that add fire-resistant measures to their homes. State regulators are also calling for insurers to share the formula they use to calculate rates with the public.
But some argue that the California Legislature is not doing all it can to help homeowners with the insurance crisis this time of need.
Join a Free California Wildfire Property Damage Lawsuit Investigation
If you experienced property damage or tree damage during the California wildfire 2020 season, your insurance company should cover your losses.
If you believe your insurer underpaid you for your losses, or if you were underinsured, it is not too late to fight for the compensation you deserve.
This article is not legal advice. It is presented
for informational purposes only.
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