Insurers dropped nearly 350,000 California homeowners with wildfire risk

"After two disastrous fire seasons, California officials have been besieged by homeowners in fire-prone areas complaining that their insurance premiums are skyrocketing or their plans are suddenly being dropped. Now regulators finally have a better idea of just how bad the problem is. The number of rural homeowners dropped by insurance companies topped 340,000 in just four years, according to figures released Tuesday by Insurance Commissioner Ricardo Lara’s staff.

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Getting dropped by an insurer in fire country can be catastrophic for homeowners. Often they can’t find replacement coverage from traditional carriers and have to buy insurance from one of two alternative sources: a “surplus lines” company whose rates aren’t regulated by the state, or the California FAIR Plan, the state’s “insurer of last resort.” A total of 21,848 Californians bought FAIR Plans for the first time last year. Either way, their premiums will likely double or triple, adding thousands of dollars of expense to household budgets in parts of the state where incomes tend to be low. A task force advising Gov. Gavin Newsom on wildfire issues reported in June that coverage typically costs 50 percent more in high-risk zones than other parts of the state. However, even with the flurry of non-renewals in recent years, roughly 98 percent of Californians get coverage from traditional carriers. “Insurers remain committed to covering homes in rural and urban zones, despite paying out more than $26 billion in claims from the 2017 and 2018 wildfires,” said the American Property Casualty Insurance Association and the Personal Insurance Federation of California, two lobbying groups, in a prepared statement responding to the new data.

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