But losses from the 20 wildfire seasons wiped out nearly twice the combined underwriting profits for California homeowners’ insurers for the previous 26 years, he said. Home insurers, Taylor explained, count on rates building up a reserve of funds over years to cover the occasional catastrophe.
“In the past five years, we’ve just seen a new level of risk associated with wildfire.” “2018, that’s when the world changed,” said Seren Taylor, senior legislative advocate for the Personal Insurance Federation of California, referring to the state’s most destructive wildfire, the Camp Fire, which destroyed the town of Paradise that year. Insurers say they must price policies to reflect mounting risks, driven by a warming climate, increased home-building in the so-called wildland urban interface, years of fire suppression and now rising construction costs driven by record inflation. Of California’s 20 most destructive wildfires on record, 13 have scorched the Golden State since 2017. average rate of $1,311, the Property Insurance Report said. The hurricane-battered Sunshine State has consistently posted the country’s highest average rates for the most common homeowner policy, at $2,165 in 2020, up 8.9% in one year and 7.5% over a decade, according to Risk Information’s January Property Insurance Report.Ĭalifornia’s average rate for the same policy in 2020 was $1,241, up 5.4% over the previous year and 28.3% over 10 years, but still below the U.S. National insurers like State Farm that dominate markets in most states have just a small presence in Florida, where more than half of insurers based in the state are on a financial health watch list and seven have liquidated in the past year and a half, CNN reported this month. I think we’re in this kind of inflection point where California moves in the direction of Florida - Florida is not a market I’d want to replicate.” “When carriers start walking away, that’s serious,” said Patrick Sullivan, senior editor of Orange County-based Risk Information Inc. As state regulators keep a lid on premium hikes, fewer companies are willing to write policies, driving up rates for those still in the game. Industry experts say California faces a long-overdue reckoning with the true cost of insuring homes in a state increasingly ravaged by catastrophic wildfires and winter storms. But she said she never was given the option of paying more than her $500 monthly premium. She believes it’s because she filed two claims in the past six years for hotel stays when her unit was damaged by a neighbor’s pipe leak. Sharon Reeves said State Farm notified her last month that her policy on her San Ramon condominium - a policy she’s had for some 50 years - won’t be renewed. And it isn’t just affecting people who live in areas scorched by fires or inundated by floods. Now I’m just kind of scrambling to get quotes.”īaker is among millions of Californians seeing their home insurance rates rise sharply - if they can keep their policies at all. “It was just out of the blue,” the 56-year-old roofer said. But the agent withdrew it the next day, just before the nation’s largest insurer issued its stunning May 26 announcement that it won’t write new home policies anywhere in California.
A few weeks ago, he got notice his policy won’t be renewed after it expires in August.īaker looked around and got an offer from State Farm to cover his home nestled among redwood trees in the Santa Cruz Mountains.
A correction to an earlier version of this article has been appended to the end of the article.įarmers Insurance had covered Don Baker’s light-gray house with powder-blue trim since he and his family moved to Boulder Creek 13 years ago.
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