Homeowners in fire-prone areas of California may soon find there’s no one to insure their properties.
Last year, the state barred insurance companies from canceling policies on about 800,000 homes in or near areas with a high risk of wildfires. That ban is set to expire soon and there’s no way to renew it, according to the New York Times.
Insurance companies, which have been financially battered by huge payouts in high-risk areas, are expected to continue pulling out of them unless California officials allow them to raise rates.
“The marketplace has largely collapsed” in those high-risk areas, Graham Knaus, executive director of the California State Association of Counties, which has lobbied state lawmakers on the matter, told the Times. “It’s a very large geographic area of the state that is facing this.”
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“You’d think it was the apocalypse:” Fires ravaging L.A. have luxe homeowners on edge
California wildfires have killed seven people, burned more than 1.46 million acres, and destroyed at least 2,800 structures this year alone, according to newswire United Press International.
This spring, state lawmakers drafted a bill that would have allowed insurance companies to incorporate projections on future climate conditions and other data into their rates. They would continue to cover some areas and provide discounts to homeowners who mitigate their risk. The bill died amid disagreements between consumer advocates and insurance companies.
Despite the state’s rule barring insurance companies from pulling out of some parts of the state, there is evidence that homeowners are having trouble finding insurance.
The number of households with coverage from the state’s expensive high-risk insurance program, the FAIR Plan, has increased by over 50 percent in the 18 months between January 2019 and June 2020.
Rates for the FAIR Plan could go up too — the association representing insurers offering the plan wants to raise its rates by 35 percent. [NYT] — Dennis Lynch