Over 350,000 home and business owners in California are struggling to get property insurance in the state. While some of these people need insurance for new homes and business locations, a majority of them are those who require a new provider after their previous insurer canceled their policies.
If you are affected by this crisis, you probably know its cause: the raging wildfires destroying homes and property across the Western states. But what can you do about it? How do you find property and casualty insurance for your home in California? And is it possible to get one without paying excessive premiums? Below, we highlight why you haven’t been able to get good rates and what you can do about it.
Wildfire risk is escalating dangerously
The first wave of the homeowner insurance crisis in California started as a direct consequence of the 2017 wildfires. That year, over 9500 different fires burned 1.5M acres of land, damaging 10,000 structures and killing 47 people. At that time, the destruction caused was unprecedented in the state’s history and the losses recorded in 2017 surpassed those of the ten previous years combined.
Since then, however, there have been even more destructive conflagrations in 2018 and 2020. Because of the incessant fires, homes in rural parts of the state are at high risk of getting burned, placing huge burdens on homeowners. To protect themselves financially, people typically turn to insurance companies.
But that option is becoming increasingly unavailable or overly expensive. In 2019, insurers refused to renew the policies of over 235,000 homeowners in California. And most of these people struggled to get cover for their property elsewhere.
Insurance companies are feeling the bite
Back-to-back years of devastating wildfires in 2017 and 2018 caused the destruction (or damage) of over 30,000 buildings in California. Within those 2 years, insurance companies paid out over $26 billion in claims. It was the most expensive global disaster at the time, and the effect of such a large payout was enough to get insurers panicking. Their next move was to restrict renewals and access to property insurance.
Since most policies are renewed yearly, a lot of people had higher premiums (with as much as 400% increase in yearly rates) imposed on them. Many others got their coverage canceled. Additionally, new owners in high-risk areas got refused by most (if not all) insurance companies that operate in California.
This development has awoken interest in California’s FAIR plan, an initiative created in the 1960s by the state and, until now, was regarded as a last resort. From 2015 to 2018, 177% more homeowners were forced to get a FAIR policy, even though it doesn’t offer coverage against the wind, water, theft, or earthquake damage.
Final note: What can you do?
Mortgage companies require that homes are insured, and without adequate coverage, homeowners will lose their financing. As a result, you may not be able to go without insurance for long and subsequently be forced into accepting higher premiums for even less coverage. So, what can be done if you need property and casualty insurance in California and no insurer is willing to offer you coverage?
Well, one option would be to carry out wildfire mitigation work. This requires you to hire a contractor to clear the bushes and cut down the trees on your property, leaving a healthy space between your house and surrounding shrubs. After doing this, some homeowners were able to get coverage from local insurance companies.
Alternatively, you can join the suit we’re putting together against insurance carriers in the California area. All you have to do is follow this link and lodge an official complaint against the company(-ies) that have denied you coverage or canceled your insurance within the last three years. Once done, we’ll handle the rest of the legal procedure and send you regular updates as we go on
