Last year, Ann Mitchell paid Farmers a $3,467 annual home insurance premium. Upon renewal last July, and without any warning, her premium nearly quadrupled to $12,149. She’d been with Farmers for more than 25 years and had multiple car insurance policies and a business policy with them. Her agent didn’t have a good explanation for why the premium nearly quadrupled.
“What I have heard was Farmers had oversold insurance in the foothill areas and so they said, uh oh we have way too many insurance policies along this fire lane and so they jumped it up on some people,” Ann said. “My neighbor just got cancelled at the same time mine went up to 12K. In a way I feel fortunate, I at least could afford it for a while. I thought let me try to get it down and then to get something else.”
Her rambling 1930s single-story stucco and wood ranch-style house that includes a pool, garage, outdoor kitchen, and shed is nestled next to the wooded Eaton Canyon Natural Area and Nature Center. Eaton Canyon is one of the most fuel-dense areas in the Angeles National Forest. Wildfire last ravaged parts of the area three decades ago and Ann just didn’t see a rate hike that big coming.
Ann increased her deductible to get the premium down a bit to get some relief. “I feel like I am being extorted, I imagine that everyone in my neighborhood is going to face the same problem,” Ann said. “I really don’t understand how it could possibly be legal for Farmers to make such a dramatic increase in one year. To me it feels like Farmers is just trying to make as much money as possible before leaving the state. In fact, my understanding is that if agents complain at all, corporate simply threatens to leave California.”
Ann had filed only one claim with Farmers about six years ago for damage from a burst bathroom pipe that caused water to flow into walls and Farmers covered it. But she had another problem this winter during the rains. “We had a leak, and the whole closet ceiling fell down, but I did not file for that,” she said. “I thought, oh, if I file, they will increase my insurance. I was told by them that had I put in that claim, they would not insure me at all.”
Ann did ask about her wildfire risk score, which her broker told her was an 8 out of 10. “I took that to mean very risky,” she said. But she didn’t ask to see her risk score documented or to ask how it was calculated. Nor did she ask whether Farmers offered any discounts for wildfire mitigation. As it is, she keeps her property clean, and her eight oak trees trimmed.“The fire department comes through the yard every year for compliance, and I have always passed,” she said.
In June, the County of Los Angeles Fire Department sent an annual compliance letter to Ann finding that her property met their defensible space requirements. “Thank you for your diligence in providing the defensive space that will help protect your home, your family, and firefighters during wildfire events,” the letter stated. Ann never gave that letter to Farmers, nor to the CA FAIR Plan that she finally opted for instead of Farmers.
In April, Ann left Farmers and went to the FAIR Plan. “That exact week I got a letter saying Farmers was going to cancel me in July,” she said. “Nobody else will insure you if you live where I live.”
Right now, Ann is paying the FAIR Plan around $3,400 in annual premium. She has a wraparound policy for everything else besides fire with Safeco. “The new broker told me there really wasn’t anywhere else to go besides Safeco,” Ann said. Safeco costs $3,600 a year for a total of $7,000 in annual premiums. Ann had to move her car insurance to Safeco because they would not sell her the wraparound policy without that. Ann wonders how people facing premium increases for comprehensive home insurance of the kind Farmers is doling out can handle it. “I don’t understand how insurance companies think that people will be able to afford these increases.”
