9/05/2023

Fire Hazard Insurance in California




Hazard Insurance -California Fire Insurance in Trouble




The California homeowners insurance crisis has worsened in recent months, as

more and more companies have announced plans to exit the state. This has left

many homeowners scrambling to find coverage, and has driven up

prices for those who can still get insurance.

The crisis is being caused by a number of factors, including the

increasing risk of wildfires, climate change, and

high construction costs. In recent years, California has experienced a number

of devastating wildfires, which have caused billions of dollars in damage. This

has made insurers more reluctant to write policies in fire-prone areas, and has

led to higher premiums for those who can still get coverage.

Climate change is a factor in the crisis.

As the Earth's climate warms, California is expected to

experience more frequent and severe wildfires. Wildfires are now year round.

 

California government is moving to ban Phos-chek and other chemicals used to

fight fires. The red areal spray used to ritard and stop spread of fires is now

being restricted..

https://apnews.com/article/california-wildfires-retardant-pollution-lawsuit-1fa9557473357d03f01b592713afd4a3

High construction costs are another factor driving up the price of homeowners insurance.                The cost of rebuilding a home after a fire has increased dramatically in recent years, and

insurers are passing these costs on to homeowners in the form of higher

premiums.

Also, exorbitant claims for pipe break/ flooding/ water damage by 

galvanized pipes or unlimited tankless water heaters.

 

In response to the crisis, Insurance Commissioner Ricardo Lara

has taken few steps, including issuing moratoriums on insurance cancellations 

and non-renewals in fire-prone areas. 

He proposed a number of reforms, including allowing insurers to charge

higher premiums in fire-prone areas and creating a public insurance option.

Lara's response is too little too slow. 

"There are challenges, but I'm very confident

we're going to bring these companies

back," Ricardo Lara insurance commissioner says.

Also he says that forcing companies

"is not supported by law (according to) our legal team,”

California and top insurers haven’t left the

state," Lara said, they’ve just paused expanding.

 

  • Providing financial assistance to homeowners who make wildfire

mitigation improvements to their homes.

  • Creating a state-run insurance pool that would provide coverage to

homeowners who cannot get insurance from private insurers.

  • Reforming the state's insurance regulations to make it easier for

insurers to operate in California.

"There isn’t a shortage now because there are more than

100 insurers still selling policies in California." Lara says but this is

incorrect.

Lara claims he cannot stop the big insurance companies from

blacklisting California homeowners.

However, of the 100 companies listed on the insurance commissioner’s website only 20

answer the phone and issue a quote. Many are no longer underwriting or offering

ANY hazard insurance in California. < cough cough> someone is not telling

the truth.

What are causes of the crisis?

The state needs to invest in fire prevention and mitigation measures,

and it needs to make it easier for homeowners to rebuild their homes

after a fire.

Where residents build in the path of danger,

they must face that their property maybe cannot be covered.

Speed up permit processes.

Have city or county resources boots on ground after a disaster. The CZU fire in

Santa Cruz mountains and the Paradise Fire residents still have not rebuilt.

Some fought city planning resistance to allow prefabricated housing verses

stick built in the years after these disasters.

U.S. insurers have disbursed $295.8 billion in natural

disaster claims over the past three years, according to international risk management firm Aon.

That’s a high for the past three-year period, according to the American

Property Casualty Insurance Association.

 

Some homeowner insurance policies cover damage from all

manner of perils, including fire and smoke, wind and hail, plumbing issues,

snow and ice, and vandalism and theft. Floods are generally covered by a

separate federally administered program. Flood insurance is available

from National Flood Insurance Program

(NFIP). You can also purchase a FEMA flood insurance policy, or buy

one from a private flood insurance company. Going forward insurance policies

might exclude lots of items.

Allstate, Erie, State

Farm, Farmers, Safeguard, Falls Lake, AIG, Berkshire Hathaway

and Nationwide all pulled out of California. If you have an existing insurance

policy, they hire Safeguard or Ulta (or some cheap inspection company that pays

an inspector $22 to go take photographs of the hillsides around your property,

the roof eaves, roof condition, and any possible perils). They will cancel you

without notice of the cause. Boom and you will not find the same cost

replacement insurance. IF You fail to provide the new insurance to your

mortgage lender, the servicer or lender will put forced place insurance at

about four times the cost with lower coverage.

Climate has increased damages in America. Floods,

hurricanes, fire, and natural hazards are hurting insurance companies.

Examining the changes in the spatial manifestation and the

rate of arrival of large tornado outbreaks - IOPscience

Taxpayer-backed Citizens Property Insurance in Florida was

the state’s second-largest insurer in 2021 in terms of policies written, 

according to the Insurance Information Institute.

Fourteen insurance firms have either left Florida as of April or have policy

portfolios that are failing. Farmer’s, the fifth-largest homeowners’

insurance provider in the United States, said in July that it would not renew

nearly a third of its policies in the Sunshine State. A state-backed policy in

California, where State Farm and Allstate have withdrawn or significantly cut

back on new policies, covers 3 percent of residents.

 

Geico closed its sales offices in California August 2022 and

is also no longer selling insurance over the phone to California customers.

Geico suffered a $1.9 billion pretax underwriting loss in 2022.

Looks like Geico is next.

My suggestion is homeowners need an

independent insurance agent on speed dial.

Know their children's names (have a deep relationship)

and they can advise you.

They can apply for California Fair Plan which is

not great coverage but might be your only choice.  

FAIR Plan can be purchased through an agent or broker licensed to sell property

insurance and registered with the California FAIR Plan.

 

 https://www.cfpnet.com/ 

It is NOT Fast and you will have to give them

money upfront to issue a declarations page.

C G Caroline Gerardo 9/5/2023

NMLS 324982