California has experienced its share of wildfires in recent history. The CA Department of Insurance has reported losses of over $12.4 Billion from the 2018 fires, including the Camp, Woolsey and Hill fire and over $18 Billion total. These fires devastated communities, burned over 1.8 million acres and sadly claimed 80 lives. Unfortunately, this will clearly result in CA home insurance rates to increase.
So just how much are rates increasing? We’re seeing rate hikes from 20% to as high as 400%! Yes! You read that correctly, 4-0-0 percent! Obviously that is NOT good news for consumers. Prices doubling and tripling might become the norm in certain rural areas of the state.
Unfortunately, there are even more areas where consumers are receiving letters in the mail from their current insurance carriers informing them that their policy is being Non-Renewed. In short, find a new insurance policy with another company. So now what do you do?
Limited Insurance Markets
Now we have limited insurance carriers accepting these “High Fire Risk” areas with sticker shock prices. You have other companies that have decided to not loose any more money in claims and completely stop offering insurance in certain areas or in some cases the entire state. We’ve even had some companies completely go out of business due to the wildfire claims they could not afford to pay.
Even well known high-risk companies like Lloyd’s of London have seen losses and are taking the same measure with tightening up their underwriting guidelines. So what do you do when nobody will insure your high risk home? Last stop, California FAIR Plan. Per their website, ” The FAIR Plan provides insurance as a last resort, and should be used only after a diligent effort to obtain coverage in the voluntary market has been made.” It’s important to note “There is no public funding, or taxpayers’ monies involved. The FAIR Plan is not a state agency.”
Review before you renew
Whether you live in the city, the valley, desert or mountain areas, we’re all being affected by the wildfires in CA. The subsequent changes in underwriting guidelines and steady increase in premiums don’t seem to have an end in sight. Next time that dreaded renewal paperwork comes in the mail make sure you review it before you renew it. The total may not be the same as last year; consider yourself lucky if you’re being renewed with less than a 20% increase! If you don’t like it make sure you shop for homeowners quotes from different carriers. It’s still a competitive market out there and some insurance company will accept your money!