Officials Seek Solutions as Insurers Withdraw Homeowners’ Coverage
Insurance companies are ending coverage for many local homes, causing concern among property owners on the San Francisco Peninsula. Some homeowners have had their policies canceled after three decades with the same company. For example, a 28-unit affordable-housing complex terminated its coverage due to concerns about increasing sea levels. Likewise, a new homeowner, who invested in extensive wildfire protection measures such as non-combustible siding and a metal roof, encountered difficulties obtaining insurance coverage.
Property owners shared these stories during a July webinar hosted by California Assemblymember Marc Berman. The webinar addressed the growing issue of insurance carriers dropping coverage throughout the state. A recent survey revealed that insurance companies had dropped about one-third of 320 respondents from districts like Mountain View, Pacifica, Palo Alto, Menlo Park, and Los Altos.
According to State Insurance Commissioner Ricardo Lara, over 350,000 homeowners living in high wildfire-risk areas statewide have lost their insurance coverage since 2015. This number is expected to rise as insurance companies fear bankruptcy due to numerous claims for fire and flood damage on expensive properties caused by climate change, leading them to exit the California property insurance market.
The California FAIR Plan Association
Insurance companies have a history of dropping homeowners, as witnessed in 1968 after the Watts riots in Los Angeles. In response, legislators established the California Fair Access to Insurance Requirements (FAIR) Plan Association, a fire insurance pool of licensed property and casualty insurers in California based on their market share. However, this plan is considered a last resort and only covers about 3% of the overall market, offering limited protection. Taxpayers do not fund the program.
The plan to modernize the FAIR Plan and expand coverage has not been updated since the 1970s. Lara wants to extend coverage to 3 million homes and 20 million commercial properties. Instead of the current expensive wrap-around insurance companies offer, Lara proposes to make them provide comprehensive coverage. However, insurance companies object, as they see the FAIR Plan as potential competition and have taken legal action against it.
California’s New Incentive Programs
A new California law allows communities and residents participating in the National Fire Protection Association’s Firewise USA (NFPA) program to get insurance cost discounts. Even though insurance companies may cancel policies, they want property owners to decrease risks. Entire communities that meet specific criteria might lower risks enough to prevent coverage cancellations.
Lara’s office has been collaborating with various stakeholders, from state and federal agencies to trade associations, to reduce fire risk in California and stop insurance companies from leaving the market. Some programs, like state funding for clearing out overgrown areas, adding fire breaks, and other safety measures, seem to be helping.
Data shows that communitywide safety measures and scientifically-based home protection programs positively reduce fire risk, and programs decrease fire fuels.
Lara’s office has negotiated with insurers to ensure the burden of risk is not only placed on residents living in communities adjacent to wildlands and advocated for rates to be more fairly distributed across the state.
Watch the following video to learn more about protecting your home from wildfire risks.
Northern California Personal Injury Attorney
I’m Ed Smith, a California Personal Injury Lawyer. If you or a loved one has endured severe injuries in a house fire or any other accident, call our legal team at (916) 921-6400 or (800) 404-5400 for free and friendly advice. Our Sacramento personal injury law firm has assisted clients in obtaining rightful compensation for their accident and wrongful death claims since 1982. Review our successful verdicts and settlements history to learn about our expertise and dedication.
Photo by Thomas Ehling on Unsplash
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