California Homeowners Are Struggling to Find Insurance Following Wildfires


California Homeowners Are Struggling to Find Insurance Following Wildfires

By: Adam Matheny

Recently, California has seen the most destructive fires in recorded history. Thanks to these fires, homeowners are struggling with one problem they could not have foreseen. According to the California Department of Insurance, the number of complaints complete with evidence and amount of negative feedback coming in from consumers regarding insurance coverage in high-risk areas has been skyrocketing in recent years. These complaints center around the fact that homeowner’s insurance in these areas is not only hard to find but has become far too expensive for the average homeowner to afford.

One-Third of All California Homes Are Located in High-Risk Zones

According to the latest figures, approximately 3.6 million homes in California are located in the “wildland-urban interface” (WUI). Of these, 1 million are located in areas described as high or very-high-risk zones. This information can be found in the “Availability and Affordability of Coverage for Wildfire Loss in Residential Property Insurance in the Wildland-urban Interface and Other High-Risk Areas of California” published by the California Department of Insurance.

The WUI is listed as being areas where houses are mixed in with wildland vegetation. WUI homes are built in areas of heavy wildland vegetation.  In the state of California, 32.6 percent of all households are located in areas of either WUI interface or intermix. This is where the figure of 1/3rd of all homes are at risk of being damaged or destroyed by wildfire.

Homeowners in California Are Looking at Massive Premium Hikes

During the past six years, the quantity of complaints received at the Californian Department of Insurance (CDI) regarding premium increases and problems with renewal has been on the rise. The vast majority of the complaints coming from those areas which CALFIRE has designated as being at the greatest risk of being caught in a wildfire. There has been a 249% increase in complaints about policy renewals and a 217% increase in complaints about premium increases in these areas.

While only 38% of the population of California lives in these high-risk areas, their complaints account for over 60% of all those received regarding premium increases and renewal issues.

How bad is it? According to the CDI, there have been instances in which homeowners who were paying $800 to $1,000 in annual insurance premiums saw their premiums more than double to $1,500 to $5,000 without making any changes in their policy. Many insurers are merely refusing to renew homeowners’ insurance policies to those who live in these areas.

Is the CDI Doing Anything About These Issues?

Following an extensive review of these complaints, the CDI found a large number of insurance companies are no longer willing to issue new policies or renewals in these areas. They also noted that many homeowners are seeing significant increases in their premiums and extra fire surcharges for those who live in these high-risk areas.

Following their findings, the California Department of Insurance is doing everything they can to address the issues of insurance costs and availability in these areas of high fire risk. The CDI is doing its best to work with insurance companies, agents, brokers, and numerous public officials about changes that have been made to the FAIR plan. They are also working with state officials to draft laws designed to create a long-term solution to both of these problems.

Is There Anything Homeowners Can Do to Help Keep Insurance Costs Under Control?

Although the California Department of Insurance has put together legislative concepts that would give homeowners a reduction of their insurance premiums, such as deductions for adding defensive measures to their homes, none of these laws have been enacted.

Are There Insurance Brokers Who Specialize in Helping Those Who Live in High-Risk Areas?

There many insurance brokers who have been working with homes and homeowners in high-risk areas. Flow Insurance Services has access to markets to protect the mass majority of these homeowners living in the WUI.

Rather than leave yourself at risk of being caught with no insurance or premiums you can’t afford, you should contact an independent insurance broker who has plenty of experience in helping those who live in high-risk areas find affordable coverage. Although the CDI is working hard to create legislation that will help fix this escalating problem, it is the independent broker, backed by general insurance agencies like Flow Insurance Services, who are currently providing the most immediate solution to the challenges faced by homeowners until laws can be passed.

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