Californians Struggle To Secure Fire Insurance As Historic Blazes Continue To Ravage State
LOS ANGELES (CBSLA) -- Long after firefighters manage to extinguish the flames of the fires blazing across California, homeowners will be dealing with the fallout.
As wildfires continue to burn through the state at an unprecedented rate, many insurance companies are pulling out of certain zip codes, and even entire counties.
Now, when they need it most, homeowners are struggling to get coverage.
"This is the first time that I can tell you in my almost 30 year career that there are sweeping areas throughout California, Northern and Southern, where they are no insurance companies writing fire insurance," said Karl Susman of Susman Insurance Agency.
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Within the past few weeks, insurance companies have announced hundreds of zip codes where they will not renew coverage, increase coverage, or write new policies.
Shilo Ovadia and her family are in escrow on a home in one of those zip codes in Porter Ranch.
"I have been told by everyone that we are in a brush area and basically got a list of declines," she said.
Her insurance broker finally found her coverage, but with a hefty price tag.
"It's like like three times more than a typical policy or what I was expecting to pay," she said.
If a homeowner can't find coverage, the last resort is the California Fair Plan. However, the plan only offers fire coverage, so homeowners have to find a secondary policy to insure against water damage, theft, and more.
"I just quoted somebody today, and between the two policies, they are looking at $4,200 a year and that house should be $1,500 or $1,600 a year," said Sara Cohen at Penguin Insurance.
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Since 2015, close to 350,000 California homeowners in fire-prone areas have lost coverage. Lawmakers have tried to stop the practice, but so far no bills have passed.
Rex Frazier, the president of the Personal Insurance Federation of California, said that insurance companies have been forced to limit coverage because regulators won't allow them to increase premiums high enough to cover the risk.
"From 2010 to 2017, California's insurance premium, the average went up 10.6%, where as in the U.S., it went up 53%," he said. "Then we had the terrible year of 2017 and 2018 and just the year of 2017 wiped out 25 years of insurance profit in one fire season."
Susman said homeowners should expect the list of restricted zip codes to grow.
"As long as we have the quantity of fires we have now, it's definitely going to get worse," he said.
Homeowners should conduct research and ask their brokers whether they are at risk of losing their coverage when it is up for renewal. If so, start looking for a new insurer as soon as possible.
