Some California Homeowners In Fire-Prone Areas Face Steep Insurance Increase

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By Adam Raskin, KGTV ABC TV-10 San Diego, CA

July 30 2021

San Diego (KGTV) — Throughout the state, homeowners are preparing for what could be another long wildfire season.

Last year it broke the record for fires in the state, burning more than 4 million acres. This year, hundreds more fires have already occurred than in the same time frame last year.

Some homeowners say they were prepared for the worst, but not for a surge in premiums or a complete out-of-coverage.

“These companies have beaten you to integrate all your insurance needs, and then you’re at risk, so you can choose what they want,” said Bob Watkins, a San Diego County resident. I can do it. “

Until two weeks ago, Watkins lived in a significant proportion of the areas where the fire broke out.

But until 2018, it wasn’t that big. Alpine’s western fire burned hundreds of acres and dozens of homes.

His home was safe, but Bob says his insurance company dropped him a year after the West Fire.

“We are now in a high-risk area and they no longer intended to write policies for that area,” he said.

Bob’s story isn’t unique, as the state has dealt with record fire damage over the years.

Some insurers are reducing what they are willing to cover in fire-prone areas or raising prices because of risk.

In 2019, insurers did not renew 235,000 policy policies across the state, according to state data. At the same time, the new FAIR plan policy increased by 225%. Fair plan is a syndicated fire insurance pool consisting of all insurance companies licensed to operate a non-life insurance business in California.

“We are in the midst of some sort of crisis,” said Amy Buck, Executive Director of United Policy Holders.

United Policyholders is a reliable and useful information resource, a consumer organization whose mission is to reach consumers of all types of insurance.

Bach states that there are several factors that influence prices, such as climate change and new technologies.

“These tools tend to exaggerate risk. They tend to scare insurers until they run away,” she explained.

“If people can’t get home insurance, they can’t get a mortgage, and if they lose insurance and can’t find it anywhere, they can lose their home,” said Harvey Rosenfield, a consumer watchdog. Stated.

Rosenfield created Proposal 103, which was passed by voters in 1988.

According to the state, “Insurers need” pre-approval “from the California Department of Insurance before they can implement General Insurance Rating Organization of Japan. Ballots also required each insurer to “roll back” that rate by 20%. Prior to Proposal 103, automobile and non-life insurance charges were set by the insurance company without the approval of the Insurance Commission. “

Rosenfield said his organization is constantly monitoring state rate applications and whether the insurance industry is eligible for rate changes.

“In some areas the risk of wildfires is high, but in others it is not,” he said. “The rest of the world is mostly urban and there is a total demand for growth.”

So what does the insurance industry say?

“Premiums are rising because of the significant rise in risk,” said Mark Sectnan of the General Insurance Association of the United States.

Sektnan explained that premiums are, at best, an incomplete mirror of the risks they are trying to cover.

“One of the challenges facing insurers is that they basically have to drive through the rearview mirror because of the highly normative regulatory system. Premiums are not what we are. Not because it’s based on loss. I don’t know what we’re expecting because we haven’t been allowed to use that type of modeling yet, “he said.

One of the suggestions the Watchdog Group has made to mitigate price increases is a discount for customers who mitigate risk, as well as a good driver discount for car insurance.

This is what the industry is paying attention to, but Sektnan says the risk of wildfires is different.

“What we need to focus on is community relaxation,” he said. “Every home needs to do it, and you need to keep it, and it needs to be done constantly.”

If you have problems renewing your insurance company, experts will tell you to shop.

Bach’s non-profit organization provides process tips and support.

If you cannot get coverage, you have the California FAIR Plan option.

Consumer Watchdog
Consumer Watchdog
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