The California Department of Insurance ("DOI") has released a report on what it characterized as the growing problem of homeowners' fire insurance availability and affordability in many areas throughout the state.
Over the past two decades, wildfires have caused significant insured damage in what is called the wildland-urban interface where an estimated 3.6 million California homes are located and more than one million are identified as being at high or very high fire risk.
"Californians are facing more severe, more unpredictable, and more frequent wildfires," said Insurance Commissioner Dave Jones. "Add to the equation increasing development in areas more vulnerable to fire and you can see why wildfires are now an everyday threat to life and property for Californians."
The risk and cost of wildfires was brought home in late 2017 when wildfires, driven by high winds, destroyed and damaged more than 21,000 homes in the North Bay and killed 44 people. Then, in December, fires from San Diego and Los Angeles to Ventura and Santa Barbara again destroyed thousands of homes and structures and killed two people. The so-called Thomas Fire was the state's largest wildfire, charring more than 280,000 acres in December.
The DOI said that it was seeing an increasing number of complaints, feedback, and other evidence from policyholders, consumer groups, public officials, and other stakeholders that homeowners' insurance coverage in the wildland-urban interface is increasingly difficult to obtain and, if available, is unaffordable for many. The inability to obtain affordable homeowners' insurance coverage creates great risk to the financial security of individual homeowners and the economy, according to the DOI.
"Insurers are increasingly using computer models to assess the risk of fires for individual homes and deciding that homes in some areas face too high a risk," said Commissioner Jones. "In the wake of last year's wildfires, we may see more areas of the state where insurers decline to write. The legislature has given insurers broad latitude to decide whether and where to write fire insurance, therefore we are recommending new laws to improve fire insurance availability."
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].