Last year’s deadly wildfires that cut across parts of California caused billions of dollars in real estate damage, and led insurance companies to raise rates on homeowners in high-risk areas. Some insurers have even been refusing to renew policies in order to lower their exposure for potential big payouts.
Now, some homeowners whose properties are most at-risk are turning to specialized surplus insurance providers, according to the Wall Street Journal. The specialized providers are a pricier option but a necessity for homeowners rejected by traditional insurers.
Eileen Kleinschmidt, who owns a home outside Sacramento, had her $1,600 policy discontinued in 2017 and was forced to buy insurance from a surplus provider. The price was $2,500 a month. This year, it jumped to $4,000, according to the Journal.
The six most destructive wildfires in the state in recorded history took place in the last two years, costing insurers more than $23 billion. Last year’s Camp Fire in Northern California was the deadliest and most expensive on record.
In the last six months, insurers like State Farm and Allstate have filed to raise rates. The California FAIR Plan, an insurer of last resort, said it will increase rates by an average of 20 percent starting in April, the Journal reported.
In November’s Woolsey Fire that devastated parts of Los Angeles and Ventura counties, there was an estimated $5 billion in damage, including around $1.6 billion in Malibu alone. Los Angeles has more 114,000 buildings within the state’s highest risk zone for wildfires, and some experts have called for stricter zoning in those locations. [WSJ] — Dennis Lynch