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Homebuyers In Northern California 'High Fire Zones' See Insurance Rates Go Through The Roof

PARADISE, EL DORADO COUNTY (KPIX) -- The start of fire season should be a wakeup call for homebuyers in this red hot real estate market. That's because finding insurance for your dream house, if it's next to wildland may give you sticker shock.

It's busy times for Danielle Perreira, a realtor with Z Group Real Estate in Pollock Pines. People are flocking to the Sierra foothills to buy their dream home far away from the big city at bargain prices by Bay Area standards. But there's a hitch.

Ever since Paradise burned to the ground in 2018, home insurance costs in El Dorado County have gone through the roof, catching home buyers by surprise.

"We have seen deals fall through. People have paid for inspections, they've removed contingencies, and then they realize that their homeowners insurance is going to be $7,000- $8,000. We've even seen quotes as high as $15,000 and $19,000 for a year," said Perreira.

Hardest hit are areas designated by Cal Fire as "very high fire hazard severity zones."

Most of the Sierra foothills are included, but also big swaths of the Bay Area including the Oakland and Berkeley Hills, Lamorinda, Pleasanton and parts of San Mateo and southern Santa Clara counties.

Homes for sale in those high fire zones already have to include a real estate disclosure about it. But the skyrocketing insurance trend has prompted Z Group to go a step further. The real estate company now requires prospective home buyers to sign an addendum with their offer that says "buyer must provide signed homeowners insurance quote."

And even that may not be enough.

"It's just unfortunate because we hadn't budgeted this kind of money," said John, who didn't want us to use his last name.

He bought his dream retirement home on Apple Hill in El Dorado CEounty four years ago. He knew insurance was going to be expensive, but not this expensive.

"We've gone up about $2000 each year when it gets renewed," said John.

His home insurance went from $2100 at purchase to $8400, even though he has done everything he can to harden the house and create a defensible space.

"We've taken out over a hundred trees and I mean, these were all cedars and pines that were over a hundred feet tall. It just killed us," said John.

But he says it was all to no avail.

"Unfortunately he can't control what is around him," said his insurance agent Aurora Mullett, who runs a Facebook group to help the community with questions about the insurance crisis.

"They've created a programming system that takes into effect what is the slope around your property, how much fuel do you have around your property. So those factors go into basically an algorithm and it spits out a score," said Mullett.

She says just one fire score can override any preventive measures a homeowner takes.

"It doesn't get reweighted. He's still paying the highest surcharge that there is in the California Fair Plan.

And Mullett says the scores are all based on factors that are kept confidential. John agrees.

"They don't disclose that and they don't allow us to see it. And there's no way to appeal it or even check to see if it's correct or to have it updated. And that's not fair," said John.

"He is absolutely right. The current system is not fair," said California Insurance Commissioner Ricardo Lara.

Lara wants to create statewide standards that would require insurers to disclose the data behind their fire scores.

"Right now it's essentially a black box. Nobody knows why they received that score, how they received it," said Lara.

The proposed new rules would also allow for appeals and guarantee discounts.

"You know good drivers get a discount. Insurance companies should be providing discounts for mitigation. Not only does it make sense, but it incentivizes Californians to continue to do the right thing," said Lara.

The new insurance standards would add predictability for home owners and buyers in high fire hazard zones. Because right now in these zones an insurance quote today could be gone tomorrow.

"We try to tell everybody, if you're at your max now, then expect five years from now you're not going to be able to afford this home. So really look at whether or not this is something that you're willing or able to do," said Mullett.

As for John, despite his insurance nightmare he has no plans to sell his new retirement home on Apple Hill.

"I mean it's beautiful up here. The deer are right up there watching us as we are filming this, it's like it doesn't get nicer than this," said John.

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