Keeping Fire Insurance in California Is Becoming More Difficult

by | Nov 2, 2020 | Insurance Defense

In the last two years, wildfires have ravaged large swaths of California. So far in 2020, 19 wildfires have burned more than 4 million acres and destroyed 10,488 structures. In 2019, wildfires burned more than 259,823 acres and destroyed 724 structures. Many of those structures destroyed were people’s homes, leaving billions in property damages.

As the threat of raging wildfires has grown, more California homeowners can’t secure fire insurance. Insurance providers are declining to renew fire insurance in California due to increased risks of wildfire destruction. In fact, according to a recent CBS report, 235,250 homeowners in 10 California counties have been unable to renew their fire insurance. Others are facing steep homeowners’ insurance premium hikes.

Forcing Insurers to Continue Coverage

Because so many homeowners were losing their fire insurance, California banned insurers from dropping fire coverage in 2019 for 800,000 homes in risky areas. However, that ban is about to expire, and it can’t be renewed.

Consumer advocates are concerned that more insurers now will balk at providing fire coverage for California homes, leading to a real estate crisis.

Other Regulatory Issues

California also:

  • bans insurance providers from setting rates based on potential future damages
  • won’t allow insurers to pass on the cost of buying their own insurance
  • Yet with more wildfires, insurers will be in a pinch as to how to provide coverage without incurring company losses.

Insurance companies are likely to face litigation over denying fire coverage if large wildfires continue to spark each year. Insurers may need to seek out attorneys who can provide a strong insurance defense to protect their company’s bottom line.