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More California Homeowners Losing Insurance In Fire-Prone Areas

April Ehrlich/JPR News

Updated Aug. 22, 1:31 p.m.

The 10 California counties most prone to wildfire saw a 10 percent increase in dropped homeowner’s policies last year, compared to 4 percent for the five counties with the lowest risk.

These 10 counties are Alpine, Amador, Butte, Calaveras, El Dorado, Mariposa, Nevada, Sierra, Trinity and Tuolumne.

In response, the California Department of Insurance says it would like to work with companies to ensure coverage for all homes in exchange for statewide fire-protection standards, including requiring everything from fire-resistant roofs to double-paned windows.

Department spokesperson Michael Soller said the state does not have a single standard for how to keep homes safe from wildfire or to secure accessibility to fire stations and roads. “It's a patchwork of different policies around the state, and insurers don't recognize those home-hardening measures that do exist,” he said. 

The American Property Casualty Insurance Association says the industry would need to see proof of the effectiveness of such standards before insurers would agree to cover all homes in fire-prone areas.

"We need to understand this is beyond just an individual property,” said the association’s Mark Sektnan. “While everybody should do it because you want to protect your most important asset, which is your house, we also need to understand this needs to be done on a community basis.”

Last year, some 900,000 homeowner’s policies were not renewed, but only 167,570 policies were dropped by insurance companies. Four times as many left their insurance companies, according to the department. 

Of those whose policies were canceled, the Department of Insurance did not say how many homeowners found a new company for coverage. There were more new policies written than policies canceled. The department’s data does now indicate how many of those policies made up the 970,000 new policies. 

Soller did say consumer complaints to the department about premium increases in counties with the most wildfire risk are up 224 percent since 2010.

As CapRadio reported earlier this year, Camp Fire homeowners began receiving cancelation notifications soon after the fire.

There is another, more expensive insurance market, typically for people who cannot find homeowners insurance. In the counties at highest risk for fire, purchases of such insurance increased by 38 percent last year. The option is allowed under the California Fair Access to Insurance Requirements Plan. 

The Department of Insurance says it has no control over rates of so-called surplus lines, which have no guarantee of payment if the insurer becomes insolvent.

Insurance Commissioner Ricardo Lara announced earlier this month the formation of a department “strike team,” which will visit communities impacted by wildfires. The team’s goal is to connect residents to resources, and to help local governments with the community’s insurance issues.

In 2018, a bill authored by Lara, who at the time was a state senator, ensured at least one year of continued coverage for homeowners with property in fire zones. 

Cal Fire says there were more than 16,318 homes destroyed by fires last year. 

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