As wildfires have grown in frequency and severity throughout California, insurers are abandoning homeowners in high-risk areas at a staggering pace.
In both Northern and Southern California, homeowners have struggled to get companies to cover them to rebuild after they lost their homes. And the situation is getting more dire, as insurance companies are deciding to raise premiums, lower coverage, or terminate policies for homeowners in high-risk areas when their plans come up for renewal, according to the Los Angeles Times.
A report from the California Department of Insurance showed that the number of homeowners in high-risk areas who complained about insurers terminating their plans more than tripled between 2010 and 2016. Complaints about increased premiums increased by more than 217 percent over the same period. And worse, California Insurance Commissioner Dave Jones said the trend is expected to escalate after companies in the state received nearly $12 billion in claims just from the wildfires in October and December of last year.
Jones said it has forced some insurers to offer policies that do not cover wildfire damage.
The problem has caused some homeowners to choose plans with non-admitted companies, which are not regulated by the state and often leave customers vulnerable to big premium hikes. Consumers in high-risk areas, or fire victims in communities recently hit by fires, also have to avoid scam artists and unlicensed contractors as they become easy targets for fraud and price gouging, Jones said.
“These catastrophes also can blow in fly-by-night unlicensed contractors and door-to-door scam artists eager to capitalize on the misfortunes of innocent and traumatized wildfire survivors,” Jones said in a statement.
He said lawmakers must act to protect consumers from increased rates and canceled plans.
The CDI said on Aug. 29 that a bill to strengthen protections for wildfire survivors passed the Legislature and is headed to Gov. Jerry Brown. If approved, it will prohibit an insurer from canceling or refusing to renew a policy based solely on the fact that a structure is in the area of a declared state of emergency.
For now, homeowners in high-risk areas can join the California FAIR Plan, a program that provides coverage for homeowners abandoned by companies in the market. In the past four years, the number of residents covered by FAIR policies in the high-risk areas grew by 35 percent – or about 8,000 additional homeowners. [LAT] — Gregory Cornfield