Nearly 350,000 California Residents Dropped by Insurers over Wildfire Risk

The number of California’s rural homeowners dropped by insurance companies is up to nearly 350,000 in just four years, the Fresno Bee reported this week. But what is not addressed is that without the ability to properly insure the home, many homeowners say their homes are rendered worthless because they cannot sell them. All mortgage companies require real estate property owners to carry homeowners insurance.

California Globe recently talked with residents of Chico who are experiencing this latest crisis following deadly wildfires: “Homeowners insurance is also becoming a huge problem with existing homeowners. Anthony said his homeowners insurance was just cancelled out of the blue. He reported many other’s whose homes were not burned down are being notified of cancellations as insurance companies are telling customers they are no longer offering insurance in the wildfire areas.”

My husband and I were notified yesterday that our homeowners insurance was being cancelled immediately on a home we own in El Dorado County – far from the recent wildfires, but in national forestland. Our insurance plan even had a $65,000 deductible for fire.

One resident of Chico told California Globe he received homeowners insurance quotes as high as $9,000 per month.

“I have heard from many local communities about how not being able to obtain insurance can create a domino effect for the local economy, affecting home sales and property taxes,” Insurance Commissioner Ricardo Lara said in a prepared statement on his website. “This data should be a wake-up call for state and local policymakers that without action to reduce the risk from extreme wildfires and preserve the insurance market we could see communities unraveling.”

Lara says he’s working with the Legislature on additional reforms, including a proposal to require insurers to guarantee renewals if homeowners “harden” their homes to reduce risks. He also wants to see state insurance subsidies for low-income rural Californians. “We need to take pro-active steps to protect our consumers,” he said.

“Last year, insurers refused to renew 2,323 homeowner policies in Sonoma County of 135,000 policies overall, according to the insurance department’s report,” the Press Democrat reported. “That figure was similar to the number of nonrenewed policies annually since 2015. However, the number of homeowners in the county in 2018 who chose not to renew a homeowner policy increased by 12%, from 11,203 in 2017 to 12,511 last year.”

The North Bay Fires, and the Wine Country Fires, were a series of 250 wildfires in October 2017, which burned 245,000 acres in  Napa, Lake, Sonoma, Mendocino, Butte, and Solano Counties, also rendering homeowners in those areas in a homeowners insurance crisis.

The 10 counties with the most homes in high or very high-risk areas include Tuolumne, Trinity, Nevada, Mariposa, Plumas, Alpine, Calaveras, Sierra, Amador, and El Dorado, according to the Insurance Commissioner. The five counties with the least homes at risk include Yolo, Merced, Sutter, Imperial, and Kings. The 10 counties are being compared to five counties so each set would have roughly the same number of housing units based on Census data. According to the California Department of Finance, in 2018, there were 248,958 housing units in counties with the most high-risk homes and 260,718 housing units in counties with the most low-risk homes.

According to the Insurance Commissioner: If California residents cannot obtain insurance on the voluntary market, their only options are to find insurance coverage under the FAIR Plan or from surplus lines, often at much higher costs. When looking at the 10 counties with the most homes in high or very high-risk areas, there is a steady rise in new FAIR Plan policies growing 177% between 2015 and 2018. Nearly 57% of the new FAIR Plan policies written are now written in State Responsibility Areas up from 47% in 2015. Between 2015 and 2018, the number of surplus lines policies in the State Responsibility Area increased by 49% (from 10,521 to 15,636).