Bay Area legislators trying to lure insurance companies back to California
Bay Area congressional representatives hope to lure property insurance companies back to California with legislation that could reduce their losses by giving property owners financial incentives to improve emergency preparedness.
U.S. Rep. Mike Thompson, D-St. Helena, announced bipartisan legislation on Thursday that would establish a grant program and offer tax breaks to property owners who take measures to fortify their property against fire and other disaster threats.
The legislation was co-authored by Doug LaMalfa, R-Richvale, and co-sponsored by Rep. Jared Huffman, D-Marin, and others.
The bill, House Resolution 7849, is called the Disaster Resiliency and Coverage Act. It comes after several major insurance carriers announced that they would stop offering property insurance in California and would not renew existing policies.
By motivating disaster mitigation work by property owners, the legislation aims to lower insurance losses and convince insurers that the state is worth operating in.
"Our bill is a clever way to solve this problem: it incentivizes disaster resiliency, which will in turn bring insurers back to the marketplace," Huffman said.
Under the proposal, grants of $10,000 for resiliency work would be offered to property owners through the Federal Emergency Management Agency. Tax breaks of 30% of resiliency costs would also be offered to help larger property owners recover the cost of preparing their property through hardening techniques, including strategies like creating defensible space and using fireproof building materials.
Thompson and Huffman announced the legislation at a press conference with local leaders in the Coffey Park neighborhood of Santa Rosa, which was devastated by the Tubbs Fire in 2017. The wildfire destroyed a total of more than 5,600 structures and killed 22 people.
"As insurers increasingly pull out of housing markets, California homeowners and business owners are struggling to find coverage," Thompson said. "Families are increasingly relying on their insurers to help them rebuild."
The state's three largest insurance carriers — State Farm, Allstate, and Farmer's — cover 40% of policies in the state, according to Thompson's office. The companies have cited persistent wildfire and flood risks as reasons for abandoning the state.
State Farm announced in 2023 that it would stop accepting new policies and said in March that it would not renew 72,000 policies. Multiple other carriers, including USAA, Travelers, Nationwide, Chubb, and The Hartford, have also limited or restricted coverage in the state, especially for properties in disaster-prone areas.
Huffman said many of the people who rebuilt after the Tubbs Fire would not have any option for affordable insurance coverage in today's landscape.
"For many folks in California, it feels like disaster hits just as we're getting our feet back under ourselves from the last big storm or wildfire," Huffman said. "Crisis after crisis like this has led to insurers either fleeing the area or jacking prices up that are unrealistic for the average homeowner."
Homeowners lose about 12% of their home's value when it is uninsured, according to Thompson's office.
Rohnert Park Mayor Susan Hollingsworth-Adams spoke at the press conference in support of the bill. She said the city would lose over $800 million in property value if homeowners couldn't be insured.
The only new policies available in the state are those offered in the excess or surplus market, which allows approved out-of-state carriers to offer coverage at higher prices.
The bill also restricts the grant money from being treated as taxable income and advises states to consider disaster mitigation efforts when setting premiums. The bill will next be heard by the House Ways and Means and Transportation and Infrastructure Committees.
