California orders insurers not to drop homeowners in wildfire-prone areas

Samantha Fields Sep 21, 2021
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A table and chairs remain in front of a Greenville, California, home destroyed by the Dixie Fire. State Insurance Commissioner Ricardo Lara wants insurers to reward residents who mitigate fire risk. Justin Sullivan via Getty Images

California orders insurers not to drop homeowners in wildfire-prone areas

Samantha Fields Sep 21, 2021
Heard on:
A table and chairs remain in front of a Greenville, California, home destroyed by the Dixie Fire. State Insurance Commissioner Ricardo Lara wants insurers to reward residents who mitigate fire risk. Justin Sullivan via Getty Images
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The state of California has imposed a one-year ban on insurance companies dropping homeowners who live in areas affected by some of this year’s major wildfires — including the Dixie and Caldor fires.

More and more Californians who live in areas considered at high risk for wildfire have seen their homeowners insurance canceled, then found that their only options are significantly more expensive.

Insurance is all about risk, and in California, the risk of wildfire has been going up.

“2015, 2017, 2018 were really big years. 2020 was also a tough year,” said Joel Laucher, an insurance consultant in California.

Many insurers are looking at how to reduce their risk, and “insurance is a real challenge in wildfire areas as fewer and fewer insurers are making coverage available,” he said.

Between 2018 and 2019, the number of homeowners whose insurers refused to renew their policies grew about 30%, according to state data.

Most homeowners still have options for insurance, said California Insurance Commissioner Ricardo Lara.

“But there are places in our state where you cannot get insurance companies to even call you back,” he said. “And we have to restore competition in those places.”

The best way to do that, Lara said, is by getting communities and individual homeowners to take concrete steps to minimize fire risk.

Andrew Plantinga, an economist at the University of California, Santa Barbara, offered several ideas.

“They can clear vegetation near their home, they can make sure that they’ve got a roof that’s fire resistant, they can put in vents that prevent embers from flying inside and burning their house down,” he said.

Insurance companies don’t always take those kinds of efforts into account, although Lara said they should.

“We’re starting to see now a growing number of insurance companies that are giving people discounts for their mitigation,” he said.

Lara said he’s working on new rules that would require insurers to provide discounts if people and communities meet certain standards for reducing fire risk.

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