Challenges for Homeowners Due to Wildfires
Roseville, CA- The California Department of Insurance is warning he current wildfires may make insurance more expensive and harder to get and hold in the future
The current fires have caused more than 10,000 to evacuate and their homes remain under threat. The number and severity of fires will make it more difficult for homeowners in California to find and hold on to insurance. This includes those whose homes were not affected by the current fires.
In a recent news article I read, “California Insurance Commissioner David Jones told the Associated Press that more insurance companies may choose not to renew policies, or may stop writing homeowners policies in areas with the highest fire risk. He also says homeowners in the state should be prepared to face rate increases. Also, some portions of the state may be reclassified from safe to high-risk for wildfires that could jump costs for homeowners.”
During 2016, insurance companies cancelled or did not renew more than 10,000 fire policies in the 24 highest risk counties. This was an increase of 15 percent from the previous year and the current round of wild fires is sure to accelerate cancellations and non-renewals. Claims for 2016 were about $12 billion, the highest level ever and likely be higher for this year.
Nontraditional channels
There are nontraditional channels to obtain insurance for those homeowners who get dropped but the cost is higher and the coverage limited. This is likely to push homeowners who can’t afford fire policies to self insure which is risking their financial health and depend on relief for federal and state governments.
Millions in Risk Area
The California Department of Insurance estimates 3.6 million homes are located in a wildfire risk area. Of these there are 1 million homes consider to be high or very high risk of fire.
