California Wildfire Victims Face Their Toughest Foe: Insurance Companies

Published on


June 21, 2021

They held a potluck picnic on Sunnyside Road a few weeks ago. It was more like group therapy with a side of chicken wings.

The Sunday afternoon gathering in early April was a reunion for a Napa Valley neighborhood reduced to rubble by the Glass Fire last September. Amid a collection of tree stumps and lots that have been scrubbed clean, it was a chance to exchange notes about contractors and architects — and trade pep talks about the painful months ahead.

Ian MacMillan, a high school football coach, attended the get-together with others who’d lost their homes.

“We’re kind of in this together, helping each other out,” he said “There’s no way I’d want to leave — no way.”

From wine country to the Sierra Nevada foothills, rural Californians have been struggling with a deepening crisis in California’s insurance market. Tens of thousands have been deserted by their carriers because of wildfire risk, forcing them to find replacement coverage at double or triple the rate. 

For many of those who lost their homes to fire, a secondary problem has emerged: The coverage they had isn’t enough to enable them to rebuild adequately.

And so it is in Deer Park, a semi-rural enclave in the hills above the wineries and gourmet restaurants of St. Helena, where the Glass Fire destroyed hundreds of homes.

“I know a lot of people are deciding, if they do rebuild, can they get insurance?” said Roger Lutz III, the Deer Park fire chief.

Lutz said as many as one-third of the homes in Deer Park burned down last fall. The community lies in an area designated as a wildfire “hazard severity zone” by Cal Fire. The risk is hardly a secret to the staunchly loyal residents.

“Most people know they’re in a fire area,” said Lutz, whose aunt and uncle lost their home.

The insurers know all about the hazards lurking in Deer Park. Long before the Glass Fire ignited, they’d dropped many of the residents.

Between 2015 and 2019, more than 17,000 homeowners in Napa and Sonoma counties lost their coverage, according to figures compiled by Insurance Commissioner Ricardo Lara’s office. It’s been worse in the Sierra foothills counties: 25,000 policies dropped in Nevada and Placer counties.

“Every buyer in Nevada County is scared about that,” said Tiffni Hald, a real estate agent in Nevada City. “Every buyer is worried about, ‘Can I get insurance?’ There’s nobody writing (coverage) up here at all.”

In many cases, homeowners who lose their coverage wind up on the FAIR Plan, the state’s “insurer of last resort,” which offers them a bare-bones plan limited to covering fire hazards. In 2019 alone, about 75,000 Californians were forced onto the FAIR Plan.

Because the FAIR Plan only covers fire damage, customers have to supplement it with a comprehensive homeowners’ policy to handle burglary, accidents and other perils. When all is said and done, most FAIR Plan policyholders pay two or three times what they had been spending, at a cost of several thousand dollars a year.


State officials have been struggling to solve the insurance crisis, without much success.

Last year, Lara introduced legislation to force insurers to provide coverage in areas that have been “hardened” against wildfire risks through tougher building codes and other measures. But insurance lobbyists killed the bill, arguing they shouldn’t be required to sell policies until specific standards for hardening had been established. With the bill dead, Lara agreed to work with the industry on developing standards, a process that’s been underway since last fall.

A separate task force convened by Lara — to examine the risks caused by climate change — floated a series of ideas earlier this month, aimed at easing the shortage of affordable insurance in hazardous areas. Among other things, the panel proposed discouraging new development in fire-prone areas by halting state spending on infrastructure around those developments.

The panel also proposed banning sales of FAIR Plan policies in new developments unless the projects can be deemed safe. The idea is that guaranteed coverage, even at costly prices, “enables further developments in high-risk areas,” the task force said.

The building industry quickly opposed the panel’s proposals, saying they would squelch the pace of new development in places where it’s needed. Meanwhile, Consumer Watchdog, an advocacy group for insurance customers, accused Lara of essentially absolving insurers of any responsibility for the crisis confronting homeowners.

Whether the panel’s ideas will gain traction remains to be seen. In the meantime, the state is trying to give homeowners some temporary relief. Last November the commissioner, invoking a law he wrote while he was in the Legislature, imposed a moratorium that forbids insurers from dropping homeowners with properties within, or immediately adjacent to, the zones that burned in 2020 — the second such order he’s issued in two years.

But the latest moratorium expires in November, and residents of places like Deer Park are going to see their coverage disappear.

“When that moratorium expires, many homeowners will be losing their coverage,” said David Capponi of MIV Insurance Services, a major insurance agency in the St. Helena area.

In the meantime, the question is whether insurance issues will prolong what is already shaping up as a difficult recovery. Just ask Lynn Grace.

The Glass Fire destroyed the Sunnyside Road home she shared with her husband Kirk. They saved their two horses and a Labrador mix named Happy, but lost their chickens and a cat. Their oak and fir trees — gone. 

It would be easy to give up. Although the winter rains greened up the area, the fact is the entire neighborhood was flattened, including an elementary school that was largely destroyed.

But the Graces are standing their ground. They’ve tried to rally their neighborhood. They hosted the recent potluck and took comfort in hearing the progress folks were making on clearing debris from their land and finalizing building plans.

“We all want to stay,” she said. 


The Graces have already run into insurance problems. They were already stuck with the FAIR Plan before the Glass Fire, and after the fire they had to spend thousands — out of pocket — to have dead trees removed from their property after the flames were extinguished. When they discovered their policy didn’t provide enough cash for a rental home they wanted, they chose instead to purchase a pair of RVs. They live in one; an adult child lives in the other.

And now they’ve been told their coverage won’t pay enough to rebuild their home. Their contractor says the project will cost at least $800,000 — far more than their policy will pay.

“We will be hundreds of thousands of dollars short,” Grace said. “A number of our neighbors are questioning whether they’re going to be able to do this.”

Grace is furious with the FAIR Plan, saying she’d been assured by an agent before the fire that she had adequate coverage. “You find out the advice was woefully wrong,” she said.

Under-insurance has become something of an epidemic in wildfire-prone areas. The state doesn’t have data on the problem, but the PG&E Corp. bankruptcy offered a telling statistic: Insurers paid $20 billion to homeowners and other victims of wildfires linked to the utility company’s equipment — and that wasn’t nearly enough. PG&E agreed to pay those victims an additional $13.5 billion to cover uninsured damages.

The rash of fires contributes to the under-insurance problem. A series of major fires since 2017 has destroyed thousands of homes in the wine country. That’s sent the cost of materials and labor soaring. If people weren’t under-insured to begin with, they are now — complicating their efforts to rebuild what they lost.

“Almost everyone is probably under-insured,” said Capponi, who’s a part-time firefighter when he isn’t selling insurance. “Replacement cost for everything has absolutely gone through the roof.”

The Graces are adamant they aren’t going anywhere. Family members are pitching in to help them bridge the financial gap caused by the shortfall in insurance coverage.

The alternative is unthinkable.

“We would have to completely uproot ourselves and go somewhere strange in our golden years,” said Grace, 59. “My family’s been here since the 1850s.

“Are you willing to walk away from family and live with strangers?” she said, taking a break from pulling weeds. “This is our new reality and we’re going to make it work.”


Dale Kasler covers climate change, the environment, economics and the convoluted world of California water. He also covers major enterprise stories for McClatchy’s Western newspapers. He joined The Bee in 1996 from the Des Moines Register and graduated from Northwestern University.

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