Dept. of Insurance Announces New Agreement With State Agencies Over Fireproofing Homes

California Insurance Commissioner Ricardo Lara announced Monday the creation of new incentives for homeowners of older homes to make them more fireproof.

The new “home hardening” incentive came as part of an announcement on Tuesday to establish a new partnership between the California Department of Insurance and Governor Gavin Newsom’s Administration. According to Lara, the new partnership aims not only to fireproof retrofitting measures, but also new standards for homes to reduce the risk of wildfires, protect lives and property, and to increase insurance availability.  Among the groups in the Newsom administration participating in the partnership are the Governor’s Office of Emergency Services, the California Department of Forestry and Fire Protection (Calfire), the Governor’s Office of Planning and Research, and the California Public Utilities Commission.

“With home and community hardening standards in place, Californians can hope to save lives and property through safer homes and increase insurance availability at the same time,” Lara said in a statement on Monday. “Our insurance market is responding to higher wildfire risk, so safeguarding homes will assist consumers in finding and keeping their insurance. I want to see companies reward efforts by putting money back into homeowners’ pockets. Both consumers and industry should embrace mitigation because we are at a crossroads, where we all realize that we have to reduce the overall fire risk and unfortunately, fires are not going to go away anytime soon.”

“I look forward to working with Gov. Newsom and his administration on this critical mitigation effort to protect homes and communities from wildfire loss.”

The Department of Insurance, as well as other state government agencies, plan to improve home hardening in measures ranging from replacing single-pane windows with double pane windows to creating more native landscaping to fireproof wood treatments.

“The main goal is to lower insurance premiums for people,” fire insurance expert Mia Gonzalez explained to the Globe. “There’s a lot of older homes in California that can easily catch fire due to a lot of risks stemming from the houses not being upgraded for decades and not adhering to some basic fireproofing principles.”

“California had an earthquake retrofitting spur some decades ago because of continued concerns, and despite some early resistance, they were put into place, with current laws still in place. Wildfires are now, sadly, a big threat to many houses and buildings across the state, so we need these new measures too.”

State concern over the California-run FAIR plan

Lara also noted Monday that many insurance companies have been dropping coverage or severely increasing rates for homeowners in more fire-prone areas due to the rise in wildfires in the 2010’s. According to Lara, 31% of all insurers dropped residential fire policies between 2018 and 2019. This resulted in a 225% rise in the number of homeowners enrolling in California’s FAIR emergency fire insurance plan in the same span. Insurers, meanwhile, have paid $33 billion in wildfire claims between 2017 and 2019.

“It wasn’t outright said, but they also want less people on the state plan,” added Gonzalez. “FAIR is for people who have no other option for fire insurance because it’s the equivalent of minimum coverage for cars. And if a fire hits, even with minimum coverage, it can cost a lot. The state wants people back on private insurance and sees this as a cheaper way to do that rather than risk those FAIR people possibly getting large amounts of money should a wildfire occur.”

Further announcements for new “home hardening” initiatives are expected soon to help prepare homeowners before the 2021 wildfire season.