With several parts of California still burning, the state’s Department of Insurance has imposed a one-year moratorium stopping insurance companies from not renewing or cancelling around 2.1 million homeowners’ policies. This is the second consecutive year policyholders near or in fire-stricken locations have received a temporary relief measure. This step will temporarily protect the policies of homeowners in selected ZIP Codes.
For Ricardo Lara, an insurance commissioner, losing insurance in this difficult time should be the very last thing on a person’s mind after surviving a fire. This action provides millions of California residents some breathing room. Moreover, it pauses non-renewals while taking extra steps to expand the competitive market.
Repeated wind-driven fires in foothill and forest communities have been giving billions of dollars of provider profits in recent years.
This year alone, wildfires have charred 4 million acres of state, local and federal land. That’s over twice California’s previous record, and destroying thousands of properties. At least 30 people were killed.
Lara’s insurance order impacts policies in and adjacent to the state-declared disaster zones. It includes homeowners in these counties: Yuba, San Mateo, Mendocino, Plumas, Monterey, Mariposa, Fresno, Los Angeles, Butte, San Bernardino, Santa Clara, Madera, Nevada, Siskiyou, Napa, Solano, Yolo, Stanislaus, Santa Cruz and San Diego.
This is the second moratorium Lara has imposed since taking office back in 2019. While the first move drew out concerns that it would dissuade insurance companies from covering properties in fire-vulnerable locations, two major groups have said they’re willing to comply with the order. A study from 2018 showed people continue to settle despite the increase in fire damages.
In a joint statement, the Personal Insurance Federation of California and the American Property Casualty Insurance Association said that it’s time for them to adapt to this new reality. Moreover, they mentioned in the statement that they are hoping to work on comprehensive solutions to better account for wildfire risks in homeowners coverages.
Changing the course of climate change will take tons of time. Thus, they need to take action immediately to make the community more resilient. They can help protect the lives and properties of Californians.
Around 413,000 of 2019’s protected policy holders will be protected once again under this new order, but about 600,000 will not.
Beyond this moratorium, Lara’s team is coordinating with different consumer advocates and insurance providers to check how they can stabilize California’s insurance market – the 4th biggest in the world.
People are seeing premiums increase by hundreds of percent every year. Others, meanwhile, are choosing to quietly forgo coverages altogether. Some families and individuals have settled with the secondary market.
