800px Wildfire California Santa ClaritaAs this year’s historic wildfire season winds down, Californians living in fire-prone territory got temporary relief from another threat: they can’t lose their homeowners’ insurance policies for another year.

Premiums and nonrenewal rates have skyrocketed in California’s fire-prone regions since 2015 as companies are loath to pay for damages wreaked by the state’s increasingly devastating fires. This year, more than four million acres have burned, twice the state’s previous modern-day record. The moratorium, enacted by Insurance Commissioner Ricardo Lara, will give 2.1 million homeowners in the vicinity of those blazes — 18 percent of all policyholders in the state — another year to find a new insurance company or take steps to mitigate fire risk on their property and convince their insurer to extend coverage. 

In 2019, insurers dropped 235,274 policies in California, a 61% increase from 2018, according to data Lara’s office released in December. Sixty-five percent of those came in areas of moderate to high fire risk, and the state’s 10 most fire-prone counties saw a 203% increase in nonrenewals. 

Many of those customers have turned to the state’s last resort: the California FAIR Plan, a state-run pool that provides bare-bones fire coverage to customers who can’t find another insurer. Enrollments in the FAIR Plan jumped 225% last year. 

In 2018, Lara, then a state senator, crafted a law that insurers must wait one year before dropping a policyholder in an area scorched by fire, and two years if the policyholder’s home was destroyed.

Last December, he used that law to impose a one-year moratorium against nonrenewals in 180 zip codes identified by state fire officials as having been directly impacted by fires in 2019. The new moratorium will cover 477 zip codes, more than twice as many as the previous one. 

“Even though there hasn’t been a wildfire in the Oakland Hills since ’91, I think it remains on the list of areas that some insurers are disinclined to serve.”

Amy Bach, United Policyholders

The 2019 moratorium, which covered more than one million Californians, will expire Dec. 5, though 364,000 of those residents live in areas that overlap with the new moratorium announced Thursday. 

There won’t be a sudden, massive number of people getting dropped from their policies on Dec. 6, said Michael Soller, a spokesperson for Lara’s office. Insurers covering homeowners protected by the previous moratorium but not the new one can drop those policies on the date they started. So if you got a policy in March 2018, the insurer can’t opt out on Dec. 6, they have to wait until March 2021, for example. 

The new moratorium aligns with Gov. Gavin Newsom’s emergency declarations of Aug. 18, Sept. 6, Sept. 10, and Sept. 28, protecting homeowners within the zip codes affected by those fires for a year from that date. 

Amy Bach, who founded the national consumer advocacy group United Policyholders in 1991, said in an interview last month that the current conditions for buying homeowners’ insurance in California may be the worst she’s ever seen. 

Some Californians in fire-prone areas who haven’t been dropped are paying three to four times the premiums they did before 2015, she said. Bach said the one-year moratoriums are helpful, but said long-term solutions are needed to protect homeowners in areas that haven’t burned in the previous year or two.

No matter the work they do to mitigate fire risk on their property, many residents in those regions are now seeing cancellations because they’re considered too high-risk given how far California’s fires have spread. One example is Santa Barbara, the site of the 2017 Thomas Fire, Bach said.

“That’s the kind of place that I would expect insurers to have really pulled back because even though there hasn’t been a fire there in a couple years, I think they have concerns that there could be another one,” she said. “Even though there hasn’t been a wildfire in the Oakland Hills since ’91, I think it remains on the list of areas that some insurers are disinclined to serve.”

Insurers say the market in some fire-prone regions simply isn’t sustainable and they’re facing their own challenges paying up to reinsurers, the companies that insure the insurance companies. 

In 2017, homeowners insurers paid out $2.01 in claims for every $1 in premiums they collected, according to state data. In 2018, they paid $1.70 for every $1 in premiums. That added up: claims from those two seasons alone totaled $24 billion, although Pacific Gas and Electric assumed responsibility for roughly $11 billion of those losses. 

The 2017 fires “almost completely wiped out” the industry’s profits in California from 2001 to 2016, according to a RAND Corporation report last year. 

The insurance department and consumer advocates like Bach both say the ultimate solution lies in insurance companies incentivizing homeowners to “harden” their homes against wildfires by making improvements like installing a metal roof or cutting back brush to leave space around the home. 

Bach and Lara backed a bill this year, AB 2367, that would have required insurers to renew policies for homeowners that met state-standards for home hardening, but it died in committee after strong opposition from insurers.  

Insurance industry representatives said they agree fire mitigation measures are key to solving the issue in the long term, but argued that they need more science to better gauge how much specific mitigation measures reduce risk, as well as more flexibility in rate regulation, before they are able to partner in the home hardening measures.

The 2017 fires “almost completely wiped out” the industry’s profits in California from 2001 to 2016, according to a RAND Corporation. 

“We are, of course, as interested in mitigation as anyone because we do see homes saved by having done mitigation,” said Janet Ruiz, communications director at the Insurance Information Institute, a trade group. “The science is just getting to the point where they’re identifying what things really make a difference.”

In the meantime, customers like Jaimi Jansen, who lives in Bonny Doon, will likely continue to face rising premiums and the risk of nonrenewal. 

When Jansen moved to the area north of Santa Cruz two years ago, her home’s previous insurer refused to extend coverage, and the company she went to afterward dropped her in March. 

Now on her third insurance company, she’s paying 70 percent more than she did last year. Bonny Doon is covered by the 2020 moratorium, but the cost has left Jansen wondering whether it’s worth staying in California at all. 

“It’s going to cause people like me to leave the state,” she said. “If we can’t afford to live here because if our house burns down we can’t rebuild, what are we doing then?”

 

Pin it

Coronavirus Resources

  • 032720OutbreakCoronavirus
    April 20, 2020

    Tips for Spotting Fake News Stories — And Where to Find Sources You Can Trust

    Anytime there’s a significant news event — like a global pandemic, for example — you can expect misinformation to spread across the Internet. “Fake news” means stories that contain fabricated information, or information that’s based on rumor, shoddy methodology or a partisan agenda. With the…
  • Picture1
    April 17, 2020

    Recursos Alimentarios Durante COVID-19

    La alimentacion es una gran prioridad para muchos durante esta pandemia de COVID-19- cómo mantener a su familia alimentada en medio de despidos del trabajo, preocupaciones sobre salidas para conseguir comestibles y la posibilidad de transmisión por medio de los alimentos, todo mientras se trata de…
  • Groceries
    April 14, 2020

    COVID-19: Food Resources

    Food is top of mind for many during the COVID-19 pandemic — how to keep your family fed amid layoffs, concerns about grocery outings and food transmission, all while trying to maintain social distance. If you’re struggling to put food on the table, have questions about food safety or need help…
  • 200323 F BQ566 9001
    April 10, 2020

    COVID-19: Recursos Para Indocumentados y Sin Beneficios

    English version available here. A medida que la pandemia de coronavirus da vuelta la economía de la nación y deja a muchos sin trabajo, los inmigrantes indocumentados son particularmente vulnerables. En esta página encontrará recursos para ayudar a los miembros de la comunidad indocumentados y que…
  • 032720OutbreakCoronavirus
    April 07, 2020

    COVID-19: Resources for the Undocumented and Uninsured

    As the coronavirus pandemic upends the nation’s economy and leaves many without work, undocumented immigrants are particularly vulnerable. On this page you’ll find resources to help undocumented community members and the uninsured. UndocuFund for Disaster Relief in Sonoma County The UndocuFund,…
  • 032720OutbreakCoronavirus
    April 03, 2020

    COVID-19: Santa Clara County Resources

    Santa Clara County’s Public Health Department is providing detailed information about COVID-19 cases, deaths and hospital capacity on several data dashboards available online. The county has also assembled a variety of COVID-19 resources, as listed below and found at sccphd.org/coronavirus. Food…
  • 032720OutbreakCoronavirus
    Apr 03, 2020

    COVID-19: How to Help

    As the COVID-19 pandemic continues to take lives and strain resources, you might be wondering how you can help. Perhaps the most important thing you…
  • SR PD
    Mar 31, 2020

    Santa Rosa Police Department Mourns Loss of Detective

    Updated March 31, 2020, 4:00 p.m. The Santa Rosa Police Department reported today that Detective Marylou Armer passed away from complications from…
  • Medical
    Mar 31, 2020

    Coronavirus Resources

    The coronavirus pandemic has created new challenges for communities throughout the world. Whether you need help getting access to food, filing for…
  • 032720OutbreakCoronavirus
    Mar 30, 2020

    COVID-19: Financial Resources for Sonoma County Residents

    California and the nation have seen a surge in unemployment claims as the COVID-19 pandemic has forced companies to close their doors, leaving…
  • Library photo for website
    Mar 30, 2020

    Help the Sonoma County Library Tell the Story of Life During COVID-19

    The Sonoma County Library will be documenting life during the coronavirus pandemic with a special collection, and you’re invited to contribute. The…
  • 032920CalMattersEmptyRestaurant
    Mar 29, 2020

    California’s Shelter-In-Place Order, Explained

    By Byrhonda Lyons, CalMatters As President Donald Trump considers easing national restrictions by Easter, Californians are into their first week of…
  • 032920DowntownSantaRosa
    Mar 29, 2020

    Santa Rosa Outlines COVID-19 Support for Homeless

    The city of Santa Rosa says it’s following guidance from the U.S. Centers for Disease Control and Prevention to protect people experiencing…
  • gavin schools
    Mar 28, 2020

    Los Angeles Will Mirror New York As Coronavirus Surges, Newsom and Garcetti Warn

    By Judy Lin, Ben Christopher and Matt Levin, CalMatters Gov. Gavin Newsom and Los Angeles Mayor Eric Garcetti issued dire warnings Friday that the…
  • 032820CovidHandwashing
    Mar 28, 2020

    COVID-19: Sonoma County Resources for Seniors and Vulnerable Populations

    On March 17, Sonoma County’s health officer issued an order for all residents to shelter in place to help slow the spread of COVID-19. The order…
  • 032720CoronavirusResearch
    Mar 27, 2020

    Here’s What Happens to Science When California’s Researchers Shelter in Place

    By Rachel Becker, CalMatters As California officials desperately try to slow the spread of the novel coronavirus, Chris Miller is coaxing a sample of…

NorCal News

Science & Health News

Northern California
Public Media Newsletter

Get the latest updates on programs and events.