The forest fire insurance crisis hits even harder
If Californians weren’t already aware of the state’s wildfire crisis for the past few years, images of low smoke from the Caldor fire blocking views of Lake Tahoe should have brought back the new home reality more than ever this fall.
But for many homeowners who live in unburned areas that are nonetheless seen as possibilities for future fires, another crisis is hitting harder and harder.
It’s about the availability of home insurance and the fire coverage it offers, which is becoming increasingly scarce year after year.
It is high time to get creative and solve this thorny problem.
Yes, some owners of undamaged houses that have not yet burned down are still OK. This is thanks to a decree from the State Insurance Commissioner, Richard Lara, prohibiting insurance companies from canceling or “non-renewing” fire coverage for homeowners on the sidelines of the two most destructive fires in the world. this year: the Dixie Fire which spread for weeks over tens of thousands of acres in several counties in northern California and the Caldor fire which appeared to follow US Highway 50 from Placerville to Lake Tahoe.
But it is a palliative measure that lasts only a year. Most affected homeowners know that their policies will be canceled as soon as their insurance companies can abandon them.
No insurance company wants to be bankrupted by the California conflagrations like Pacific Gas & Electric Co. was by the unprecedented damage caused by the fires it started from 2017 to 2019, essentially a period of introduction to today’s fires which are hotter and faster than the forest fires of just a few years ago.
What developed is a situation similar to the insurance industry boycott inflicted on California in the mid-1990s, after several companies nearly went bankrupt because of earthquake payments after the quake. Northridge land in 1994 damaged densely populated parts of Los Angeles.
All of the major insurance companies canceled almost all property insurance policies in California at the time, protesting a law that required any company issuing property insurance to also offer earthquake coverage. The industry wanted to get out of the earthquake insurance business.
Lawmakers and then-insurance commissioner Chuck Quackenbush could have retaliated by denying the lucrative right to sell auto insurance to any company refusing to sell earthquake-resistant policies. But Quackenbush, whose election was largely funded by insurance companies and brokers, instead bowed to their demands. The result is the current California Earthquake Authority, which issues most earthquake policies in the state, separately from standard property insurance.
In an age when several tens of thousands of home insurance policies have been canceled in and near past or potential fire areas, perhaps something like CEA is needed to ensure that homeowners can get insurance at fairly reasonable rates.
Where policies are canceled today, some homeowners take their clothes off, but many end up buying coverage from the state’s latest fair plan (FP), the rates of which are astronomically higher than what insurance companies charge. in areas other than fire. FP registrations have risen from 140,000 to over 200,000 in the past two years, although a few companies have started to write new policies again when they were allowed to increase their tariffs astronomically.
So perhaps it is time for the legislature to at least partially separate other property coverages, such as third party liability, from wildland fire insurance.
This way, homeowners could decide how much fire coverage to purchase, rather than being forced to insure the full value of their properties against the fast moving flames. They might be required to substantially protect their homes from fire in order to qualify for such an arrangement, making one-time investments rather than large payments each year.
One thing is for sure: So far, no one has thought creatively enough about how to handle the forest fire insurance crisis at a time when it looks like several very damaging fires will plague this state every year. year.
Just ordering companies to leave policies in place for a year pushes the boundaries a short distance, but ultimately doesn’t solve much, as owners of wildland fire areas will eventually need to. new policies.
Californians have found creative solutions to every major problem this state has faced, from carrying water hundreds of miles to putting Covid vaccines in tens of millions of arms. Why not approach this major problem with the same resolute and original style of thought?
Email Thomas Elias at [email protected] His book, “The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It,” is now available in a softcover fourth edition. For more articles on Elias, visit www.californiafocus.net.