Wildfires Force California Residents To Pay More For Homeowners Insurance Coverage

A rash of wildfires has forced some major carriers to stop providing homeowners insurance coverage to some California residents. Since 2005, several wildfires across the state have contributed to billions of dollars in homeowners insurance coverage claims by California property owners. The high number of claims, as well as the high dollar amounts in these claims, have compelled some major carriers to stop offering coverage to residents in high-risk areas.

Details of Homeowners Insurance Coverage Problems

Residents in the Modjeska Canyon area experienced a tightening in their homeowners insurance coverage after a 2007 fire swept through the forested hillside. Many major carriers, including Farmers Insurance, began limiting the number and amount of homeowners insurance coverage they offered to area residents. Chicago-based Allstate Insurance dropped out of the California homeowners insurance market entirely. The company refused to write any new policies due to the losses from the 2007 fire.

Policy Holders Pay to Fill Homeowners Insurance Coverage Gap

Property owners without homeowners insurance coverage have a few expensive options. The state’s insurance department provides homeowners insurance coverage for residents in high-risk areas through a group of affiliated carriers. However, the state’s plan offers less coverage, and has higher premiums, than conventional insurance policies. Instead, homeowners are shopping for high-risk policies from specialty insurance providers. These policies offer better coverage than the state’s program, but at comparable rates.

High Cost of California Homeowners Insurance Coverage

Many residents in at-risk areas are forced to buy policies from “surplus line” carriers, which often work as the high-risk arms of traditional carriers. These special homeowners insurance coverage policies also carry high costs. One resident told reporters that Allstate canceled her homeowners insurance coverage, which had cost her $1,400 a year in premiums, in 2012. She found another policy through Lexington Insurance, a division of AIG. The new policy’s premiums totaled $2,100 a year, an increase of 50 percent.

Insurers Defend Homeowners Insurance Coverage Approach

Unlike other aspects of the insurance business, the state’s Department of Insurance does not regulate the rates charged by surplus line providers. An insurance broker in Sacramento told reporters that some homeowners insurance coverage in at-risk areas can cost up to twice as much as policies in other parts of the state. The broker said that he expects to write more than 3,000 homeowners insurance coverage policies in the next year. More than three-fourths of those policies are for homes in areas prone to wildfires.

Source: Reuters

Get Answers For Your Homeowners Insurance Coverage Lawsuit Questions

To find out how we can answer your questions about a homeowners insurance coverage lawsuit, contact one of our attorneys today. Our intake team will take down the details of your case and quickly connect you to an attorney who understands how to get the most from your homeowners insurance coverage lawsuit. You can also fill out the “Free Case Evaluation” form at the top of this page.

NOTE: This blog post is a news story and does not imply an endorsement of Arguello Law Firm by any of the parties mentioned herein.