Moratoriums on canceling fire insurance for California residents only a temporary fix – CBS San Francisco

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EL DORADO COUNTY (KPIX) – For three consecutive years, the California Insurance Commissioner has ordered temporary moratoria following major fires to prevent insurance companies from canceling or not renewing policies.

KPIX 5 spoke with homeowners not only in the Sierra foothills where large fires burn, but also in the Bay Area where many communities are also at risk of fire. We have found a general consensus: While repayments are desperately needed, they only serve as a temporary dressing for an ever-growing insurance crisis.

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“It’s really like the hunger games, you know?” You’re just waiting for your number to be called, ”said an El Dorado owner, who asked to remain anonymous.

In June, she received the dreaded letter that thousands of homeowners received warning her that her policy would expire in September “due to the forest fire risk assessment of the location of the dwelling.”

Then came Caldor’s huge fire which she says almost felt relief.

“We thought that might be the best thing. If the house burns down then we don’t have to go through everything that everyone else lives where we live, ”she said. “So many people I know have already seen their insurance premiums doubled, tripled and quadrupled. “

His house survived and the fire turned out to be a blessing in disguise. That’s because last week the state imposed a one-year moratorium on home insurance cancellations and non-renewals in or near each of this year’s major fires, including the blaze. by Caldor.

Since her zip code was covered and her policy was still in effect, she says Nationwide agreed to reinstate her for a year, covering the duration of the moratorium.

“It gives my family more time to figure out what we want to do,” she said.

“We are finding that unfortunately this is becoming much more of a problem,” said Ricardo Lara, California Insurance Commissioner. He introduced the bill that created California’s Insurance Moratorium Act when he was a state senator. It is triggered each time the governor declares a state of emergency.

“What this really gives us is respite for homeowners, and also gives insurance companies the ability to reassess their entire portfolio,” said Lara.

The portfolios are already reassessed. More than 235,000 California owners were abandoned by their carriers in 2019 according to the latest data available. This marks a 25% increase over the previous year, and not just for people living in the Sierra foothills.

“It’s a huge problem,” said Melanie Light, owner of a house in Orinda in an area classified as “Wildland Urban Interface” or “WUI”. The Bay Area has dozens of SUIs that are in the crosshairs of property insurance companies due to the high fire risk.

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In Orinda alone, 284 policies were not renewed in 2019, up 30% from the previous year. And Light says she’s spoken to many other owners who have been abandoned since then.

This despite a one-year moratorium imposed after the nearby Sky Fire. This moratorium expired last December.

“It’s like manna from heaven to take a break and know that for a year, everything is fine. But I don’t think that fixes the problem, and it may even make insurers more risk-averse, ”Light said.

“The insurance industry has paid billions of dollars in losses. So rates must become appropriate for the risks we see today, ”said Mark Sektnan, vice president of state government relations for the American Property Casualty Insurance Association.

KPIX 5 asked him what the long term solution is. Response from Sektnan: “I think we need to focus on the real problem. Insurance is not the problem. It is a symptom. The basic problem is that we have a changing environment, which is becoming more and more risky. And one of the things we need to do is manage that risk. “

This is what the Light does. She formed the Orinda Firewise Council, which provides advice to residents on home insurance and fire prevention.

“It’s not a guarantee that we will be protected or that we will be safe from fire, but we are safer when we are united,” said Light.

She still has her insurance, but the neighbors next door have just lost theirs.

“She has the same carrier as us. and I’m just, you know, praying every night that we don’t get canceled, ”Light said.

Back in El Dorado County, the owner KPIX spoke to knows it’s only a matter of time.

“We have a year. We are not falsely claiming that this will last longer than a year. I don’t think the community I live in is going to afford to live here any longer, ”said the owner.

Homeowners who can’t find traditional insurance can fall back on the state’s FAIR plan, which provides basic fire coverage for high-risk properties.

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For more information and a list of zip codes covered by moratoria, visit the California Department of Insurance website. For more information on other insurance options in the state, visit uphelp.org.


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