Although the extent of the harm caused by the raging flames in Southern California is still being revealed, concerns have already been raised about how it may affect homes insurance for all Californians.
Following a wildfire in the Dublin Hills in 2022, people like Sunita Rajagopal were left with only limited coverage and exorbitant insurance premiums.
“I contacted multiple lenders, and, you know, nobody would actually cover anywhere close to a wildfire zone,” Rajagopal stated.
She is among the millions of Californians whose homeowner’s insurance has been denied or restricted in recent years due to a rise in wildfires. Since 2022, seven of California’s top 12 insurance firms have either ceased issuing new policies or denied existing ones, according to the state’s Department of Insurance.
Indeed, according to state regulators, State Farm Insurance cancelled 1,600 policies in the Pacific Palisades neighborhood that caught fire this week just this past summer. As a last option, several of those are now included in the state’s FAIR Plan.
United Policyholders’ executive director, Amy Bach, stated that she anticipates coverage issues to persist following the wildfires in California.
“With the climate changing and risk growing, you know, there’s a price to pay for that,” Bach said. “Insurance companies are saying, ‘We’re not going to pay the price.'”
Although it’s too soon to tell exactly how the fires will affect insurance throughout the state, she is certain that it won’t be good.
“It truly depends on the total number of residences that have been destroyed. Because, according to official reports, it is currently less than 2,000. However, many are predicting that it will be much more,” Bach stated. “The number will have a big effect.”
California has announced new rules that will encourage insurance firms to write more policies in the state. They are permitted to account for the cost of wildfire risk and climate change, though, which will raise those costs.
“Right now, it’s looking like we’re going to be seeing more rate increases and continued challenges for people who are trying to keep basic protection on their homes,” Bach stated.
The clock is ticking, according to Rajagopal, for the state to enact stronger legislation governing the sector.
Eliot Pierce is a dedicated writer for ChiefsFocus.com, covering local crime and finance news. With a keen eye for detail and a passion for storytelling, Eliot aims to provide his readers with clear and insightful analysis, helping them navigate the complexities of their financial lives while staying informed about important local events. His commitment to delivering accurate and engaging content makes him a valuable resource for the community.