Deborah Carter, a retired nurse, lives in the mountains of Santa Cruz. For years and years, her home insurance was through Farmers. Then, after the CZU Lighting Complex fires in 2020, Farmers would not renew her policy, though to this day she has never made a home insurance claim. The Farmers broker helped her get onto a policy sold by American Modern. The premium was $3,200 and it covered everything from wildfire to water damage and theft.
Then, a few years later, American Modern cancelled her policy based on her location which the company said was at high wildfire risk. She was able to get a State Farm policy for the same amount. The following year, the premium rose to $3,800. Then, in 2023, when Deborah heard State Farm was pulling out of California, she called them and they said that they were not insuring for new policies, but not to worry because they were continuing all existing policies.
That didn’t last long. In April, Deborah got a non-renewal letter from State Farm, leaving her just a few months to secure a different policy before July 15 when her policy runs out.
It said: “Personal Lines Homeowners and Dwelling Fire Insurance Policies that present the most substantial wildfire or fire following earthquake hazards, or that are in areas of significant concentration are no longer eligible.”
The letter offered no steps that Deborah could take to reduce her property’s wildfire risk to keep her insurance. “State Farm washed their hands of me,” said Deborah. The letter did state that the company uses a “geographic rating” that considers wildfire risk associated with the homeowners address. “The range of available premium adjustments is currently -41.7% to 376.9%, and your adjustment is 25.9%,” the letter stated. But nothing in the letter explained what the range of ratings meant. Nor did the letter provide a fire risk map of the area and where her property was located on it.
She called her State Farm broker. “I said to her that last year State Farm told me they were keeping existing people, not cancelling. She said, well, I guess that changed. Then I said, what can you do for me? She gave me a list of other brokers that were possibly going to give me insurance and some she knew were working with the FAIR Plan.”
So, Deborah called her Farmers broker back. “I have cars, rentals, umbrella insurance with them, so I went back to Farmers and I said what can you do for me? The Farmers broker laughed and said I figure we will get a big influx of people. She got me a quote through the FAIR plan–$8,900 for the FAIR Plan plus another $1,300 from Farmers for my wraparound liability theft, water damage insurance.
Even to get the Farmers wraparound policy, the broker informed Deborah that they will require her to put in a water leak device which attaches between her house and the water tank that electronically monitors your water line for leaks. “I have to pay a licensed contractor to put it in, or have it inspected if I put it in. That is 500 bucks for the device plus the contractor costs,” Deborah said.
On the $8,900 FAIR Plan quote, “I said that is crazy. It is the only option and I find it very frightening as everything I’ve read about the Fair Plan is that it doesn’t have the reserves available for all the policies that are being written.”
Deborah asked the broker if she could negotiate with the FAIR Plan by raising the deductible to $20,000 and dropping the amount of personal property insurance from $100,000 to $50,000. She also asked to eliminate her deck and awning coverage.
The FAIR Plan also offers a list of discounts for wildfire mitigation that homeowners can undertake to harden their homes. The broker asked Deborah questions to determine if she qualified for credits. Among them were how far she was from a fire department and how many feet from a fire hydrant.
“The premium quote was going to be $6,000 and when she asked if my house was more than 1,000 feet away from a fire hydrant or four miles from a fire department, that is when the quote went to $8,900,” Deborah said. Deborah also provided information about her roof, which is shingled asphalt, and about all her windows, which are double-paned. The double panes count towards structure protections that qualify homeowners for discounts under the CA FAIR Plan.
Homeowners who are part of a Firewise community can receive a discount, but Deborah’s immediate community is not a Firewise community so far. Led by the National Fire Protection Association, the program promotes collaboration among residents, local fire departments, and other key stakeholders to bolster the fire resistance of homes and surroundings.
The Farmers broker did ask her about steps she had taken to mitigate against wildfire on her property as far as trimming or eliminating trees or bushes. Deborah had already provided that information that conforms to available FAIR Plan discounts, among them trimming trees, and removing brush and debris from the yard.
“Over the last ten years, every year I have hired tree companies to clear trees and brush around my house and rentals,” Deborah said. “I have really done a lot of tree and brush work around my house so nothing anywhere is near me. The Santa Cruz mountains are heavily forested, redwoods and trees and you go and see trees touching people’s houses and my house is not like that at all.
“I assumed that the broker included that and that was why I called her to make sure those discounts were part of what she submitted to the FAIR Plan, and they were included,” Deborah said.
She had read that the FAIR Plan is getting 900 applications a day because of all the cancellations by other home insurance companies in California. Deborah did finally receive a quote for her Fair plan policy of $7,400 and $1,300 for her Difference in Conditions wraparound policy. That included available discounts for the maintenance of her property. “So, I guess I should be happy it’s under 10k.”
The situation is unsustainable, Deborah said. “That is how home insurance is going now, they are going to deny and say no to everybody until somebody files a class action lawsuit. Farmers, Allstate, they are pulling out of California, but those are all the big companies that are financing the FAIR Plan. How is that right? They are stealing us blind, they are cancelling the smaller policies and forcing us to get these larger policies that they are getting a piece of, right, if they are the ones financing it?”
Lots of houses in Deborah’s area have recently gone on the market and she thinks it is because of the unaffordability of home insurance. “People are on fixed incomes, and this is crazy. Everybody is bitching and moaning, everybody in the county because half the people are here in the mountains.” Deborah is one of the few who can afford the premium if it comes down to it because she owns rental properties. “I am lucky enough to afford it, but I will have to raise everyone’s rent to cover it.”
