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The Real Deal Los Angeles

California wildfires are prompting some insurers to pull back on coverage

Around 1.7 million homes are considered highly prone to wildfires
November 20, 2018 02:00PM

The Woolsey Fire, California. (Photo courtesy of Peter Buschmann)

The series of wildfires that have devastated California homeowners in recent years have prompted some insurers to pull back their coverage.

Around 1.7 million of California’s eight million houses are considered highly prone to wildfire. Insurers have raised their standards for what homes they will cover and are disqualifying homeowners over risks that previously didn’t affect coverage, according to the New York Times.

Buyers are often warned — but purchase anyway — and then get hit with insurance premium increases. That’s forcing some homeowners to turn to insurers that don’t meet state standards, a risky proposition, or to take out insurance with the state’s own insurer, the FAIR Plan. Others decide to drop their plans completely.

The more people that take out policies with the FAIR Plan, the more at risk the state is in the event of a devastating fire. As of last year, the program covered 4,269 homes at extreme risk of wildfire, up from 3,861 in 2014.

Florida set up a similar program in the wake of Hurricane Andrew which eventually held a quarter of the state’s homeowners insurance market, before criticism prompted the state to sell off most of its policies.

In the wake of the fires this year, which killed at least 80 people and destroyed 15,000 structures, experts have called for state oversight of zoning in fire-prone areas. [New York Times] – Dennis Lynch