Homeowners struggle to get fire insurance
SACRAMENTO — California’s top insurance regulator said Thursday that insurers are increasingly refusing to offer homeowner’s policies in areas prone to wildfire — a problem that’s likely to get worse as companies respond to last year’s devastating blazes.
Insurers in 2016 refused to renew more than 10,000 policies in the 24 counties most prone to wildfires, according to a report issued by Insurance Commissioner Dave Jones. That was up 15 percent from the prior year, when fires in Lake and Calaveras counties destroyed more than 3,000 buildings and became some of the most destructive in state history.
Homeowners in the Madera County mountain communities have also been refused policy renewals, according to Supervisor Tom Wheeler.
Many affected consumers can still get coverage from other insurance companies. But Jones said there’s also been an increase in people forced to turn to the FAIR Plan, the state’s last-resort fire insurance program, which provides policies to people who can’t get them from traditional insurers.
The problem will probably get worse as insurers deem more houses as wildfire risks following last year’s devastating wildfires, Jones said. Blazes in Northern California in October caused more than $9 billion in insurance claims, including one fire that destroyed urban areas of Santa Rosa thought to be at a low risk for fire.
“We have a major problem here in California, and if last year’s fires didn’t teach us that we’ve got to do something about it, shame on us,” Jones said.
California has 1.3 million housing units deemed by insurers to be at “high” or “very high” risk for fire, including more than half the units in 12 counties — mainly sparsely populated and forested regions of Northern California and the Sierra Nevada.
The insurance industry is reviewing Jones’ report, said Mark Sektnan, vice president of state government relations for the Property Casualty Insurers Association of America, an industry lobby group.
“It’s too soon to tell what kind of impact the current fires are going to have on the insurance market, so I’m not sure we can necessarily say there is an availability crisis,” Sektnan said. “Some companies may decide not to write (policies), but other companies...are actually moving into the market.”
Jones, a Democrat who is running for California attorney general, called on legislators to enact a variety of measures he says would ensure those homeowners don’t lose access to affordable insurance. He wants to require insurers to provide fire coverage to homeowners who take certain steps to protect their property from fire. He also wants insurers to be required to offer discounts to people who follow the safety recommendations of local fire officials.
Jones is also looking to create a formal appeals process for people who are denied insurance coverage.
Sen. Ricardo Lara, a Bell Gardens Democrat who is running to replace Jones as insurance commissioner, has introduced legislation that seeks to limit insurers’ ability to scale back their offerings in fire-prone areas.