.Home Insurance Hell in Wildfire Country

One aspect of life in the wine country decidedly not thriving after a decade of gnarly wildfires is home insurance. After paying out billions for homes lost in California fires, all the major insurers have pulled back, either refusing to ensure homes in high-risk areas or charging an arm and a leg. (And really, we’re one big high-risk area at this point. Check out this crazy map of all the burn scars that have accumulated since 2015 — it’s like a goddamn patchwork quilt.) The only real guaranteed backup option for all of us to ensure our homes is the state government’s “FAIR plan,” which is generally even more expensive for even shoddier coverage. Another crazy map created by the San Francisco Chronicle shows Sonoma and Napa county residents are now paying anywhere from $1,500 to $4,500-plus per year for home insurance. State Farm, the biggest player on the private market, “hasn’t offered new home policies since May 2023,” the paper reports. More from the Chron: “The company said wildfire risk, construction costs and pricey premiums for reinsurance (insurance for insurers, which cannot be factored into rates in California) motivated the decision. The company has continued to renew most, but not all, of its existing policies, though prices are rising. In March, State Farm rates rose an average of 20% across the state. Shortly after the rate increase took effect, State Farm announced it would not renew 72,000 policies — 30,000 homeowner and other personal property policies and 42,000 commercial property policies.” Many of the homes getting dropped are in Sonoma County; in particular, homes along the Tubbs Fire scar. Other private insurers like Allstate and Farmers have also reportedly decided to either pull back coverage or leave the state altogether. California politicians are calling this an obvious “crisis” that needs immediate attention. The latest fix-it proposal from Gov. Gavin Newsom is to let insurance companies actually raise their rates quicker, with less review from state officials — seeing as “experts say the slow approval times are a key reason why many insurers have limited their business in the state, such as not writing new policies or dropping thousands of customers at a time,” according to the San Francisco Chronicle. Basically, “the pullbacks have pushed policymakers toward a hard choice: Let more of their constituents lose coverage, or create reforms that will allow insurance companies to raise rates faster.” Other state politicians are asking why, if fire departments and residents across California are getting so much better at mitigating fire risk and preventing large, destructive wildfires — and the government is pumping billions of dollars into these efforts — insurance companies aren’t changing their risk assessments, according to recent reports from Bloomberg and CalMatters report. “Carriers are being ultra picky,” one expert says. “They’re looking for any way to not take the risks.” So now there are a couple of bills making their way through the legislature that will try and sway insurance companies on this point. We’ll see if state officials can make any headway there. To take us out, here are some bittersweet market predictions from North Bay Biz magazine: “It will take years for insurance premiums to slow their growth and for the chaos to subside, and that assumes we have stable fire seasons, no major earthquakes or storm seasons. Climate change will not help the long-term outlook either. Financial markets are already looking at rising interest rates over time as risks due to climate change come to fruition in real estate markets and beyond. For many homeowners in the North Bay, the next three to four years is likely a time when the costs of home insurance may lead some homes to come on the market prematurely due to rising insurance costs. Economics suggest (as a point of positivity) there may also be entrepreneurship in a market that has learned lessons from the past and is preparing for a riskier future.” (Source: Napa Valley Register & North Bay Business Journal & Bakersfield Now & SF Chronicle & SF Chronicle & SF Chronicle & SF Chronicle & North Bay Biz & CalMatters & Bloomberg & Mad River Union)


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