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Los Angeles

Commissioner says fire insurance market “needs to change”

Ricardo Lara talks to homeowners about lowering premiums by fire-proofing

Insurance Commissioner Says Fire Policy Market Must Change
State Insurance Commissioner Ricardo Lara (California Department of Insurance, Getty)

California homeowners can qualify for insurance premium reductions by better fireproofing their homes.

 

State Insurance Commissioner Ricardo Lara told homeowners who live near the site of a Laguna Niguel wildfire that torched 20 homes last spring they may qualify for fire insurance discounts with a few home improvements, the Orange County Register reported.

The property owners had weathered the Coastal Fire that engulfed 200 acres and burned 20 homes last May, forcing the evacuation of 100 residences and the Ranch golf course and resort.

Lara said the state’s Safer From Wildfires initiative includes a 10-step plan on how homeowners can protect their homes and qualify homeowners for discounts from participating insurance providers.

For homeowners, that may mean investing in a fire-rated roof, ember and fire-resistant vents, multi-paned windows, plus clearing weeds and debris from beneath patio decks.

“Each of these actions qualifies you for a discount that can help you reduce the cost of insurance, but also help you keep insurance in place,” Michael Soller, spokesman for the state Department of Insurance, told residents during a town hall meeting.

Since deadly wildfires tore across the state in 2017 and 2018, insurance companies have cut coverage for tens of thousands of homeowners as providers have pulled out of high fire-risk areas. Luxury homes have also taken a hit, with fewer insurers willing to protect them.

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That has forced many homeowners to buy policies through the more expensive California FAIR Plan, the state’s insurer of last resort. But FAIR premiums have increased, Lara said, along with fire risk. In OC, the number of FAIR Plan policies shot up from 2,500 in 2017 to 4,600 in 2021.

“The FAIR Plan has become the first and only option in some areas, not the last option which it should be,” Lara said. “That needs to change. Reducing the risk is critical. That’s where we actually have the power and control.”

Which is why if homeowners can lessen fire risk through new roofs, windows and vents, they’ll qualify for lower insurance rates, state insurance officials say.

State Sen. Catherine Blakespear, whose district includes Laguna Niguel, said her office has received non-stop calls about sky-high fire insurance. Premiums have gone up by hundreds of dollars a month, she told the roomful of residents.

The soaring cost of fire insurance has had a major impact on the real estate market.

“Yesterday I had a meeting with a realtor who said he has had two deals fall out of escrow because they couldn’t get insurance,” Blakespear said. “The buyer was qualified and then was told, ‘You’re going to have close to $1,000 additionally for your insurance policy alone.’

“Somebody who’s not expecting to be paying that amount is just unprepared.”

— Dana Bartholomew

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