Insurers in California Can’t Pull Policies in Fire-Ravaged Areas

As fires have grown increasingly destructive, the state has seen a corresponding exodus of insurers from the hardest-hit areas. More homeowners are having to resort to the FAIR Plan, a form of insurance of last resort.

by Joseph Serna, Los Angeles Times / December 6, 2019
Tammy Lee Trojanowski, 46, holds her chihuahua-dachshund outside the Federal Emergency Management center in Chico, Calif., as she talks about the Camp Fire disaster. She wasn't sure her home survived in Magalia and has been living out of her pickup truck. AP Photo/Sudhin Thanawala

(TNS) — State regulators on Thursday pulled the emergency brake on insurers fleeing California's fire zones.

Insurance Commissioner Ricardo Lara announced a one-year moratorium banning insurers from not renewing policies for homeowners in wildfire-ravaged areas of the state.

"I have heard the same story again and again. People getting dropped by their insurance after decades," Lara said. "To add insult to injury, many struggle to find coverage."

As fires have grown increasingly destructive, the state has seen a corresponding exodus of insurers from the hardest-hit areas. More California homeowners are having to resort to the FAIR Plan, a form of insurance of last resort that provides coverage for wildfires exclusively. It's cheaper but provides less coverage, and homeowners are expected to supplement it with other policies.

On Thursday, Lara said the moratorium will give both homeowners and insurers time to reassess a path forward for living with wildfires.

A California Department of Insurance report last year found that the number of homeowners in the wildland-urban interface who complained about getting dropped by their plans more than tripled from 2010 to 2016. Complaints about increased premiums rose 217%.

Those statistics provide a limited view of the problem, as the state has no way of tracking policy nonrenewals and individual premium hikes. But they reflect the cusp of a trend that is expected to worsen, officials have said.

Areas where fires are common, like Lake County, have been particularly hard hit.

After a series of massive fires, residents living in or near forested areas are facing rate hikes so significant they're taking circuitous routes to find cheaper and less comprehensive coverage.

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