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California homeowners bemoan high home/fire insurance costs

November 10, 2023

While state regulators craft new regulations and consult with the insurance industry, many Californians are paying extra-high premiums — or going without insurance entirely.

In September, Gov. Gavin Newsom issued an executive order for “prompt regulatory action” to address the plight of California homeowners facing availability and affordability problems in home and fire insurance.

But at its present pace — and with doubts from consumers, lawmakers and insurers about the Department of Insurance’s proposals to alleviate the crisis — help for residents may not arrive until 2026, at least according to the most pessimistic outlook by the insurance industry.

Those waiting are Californians like the Smithlines, a retired couple in Forest Hill in Placer County, who actually saw their fire insurance premium balloon to the point that they’ve decided they will have to do without it.

Bobbi Smithline said their premium this year tripled to almost $6,000 from $1,800 in 2020. They were on the FAIR Plan — the last resort for residents who can’t find traditional insurance — because Farmers would not renew their previous policy three years ago.

“Our property taxes and homeowner insurance came at the same time as the FAIR Plan (bill),” Smithline said. “We can’t afford to do all three… that’s going to leave us with no savings.”

The FAIR Plan is mandated and regulated by the state. Premiums under the plan are usually more expensive, and they’re only getting higher. In September, California’s Department of Insurance approved a rate increase long sought by the insurers that finance the plan, for an average 15.7% rate hike.

As more and more people turn to the FAIR Plan because the biggest insurance providers in the state have either paused new policies or left the state altogether, the plan’s total number of policies climbed to more than 330,000 as of September, an almost 21% rise since the beginning of the year.

The Smithlines have lived in their three-bedroom, one-and-a-half-bathroom house for 45 years and raised most of their eight children there. They never had a wildfire until last year, when the Mosquito Fire burned more than 76,000 acres in their county and nearby El Dorado County, Smithline said.

Now she and her husband, Mike, have told their children — who will inherit the house — about their decision. If a fire destroys their house, their plan is to put a mobile home on their 7.2-acre property, or maybe live with one of their kids.

The Smithlines are among the many Californians affected by the insurance mess. But at least they have a choice. Because their home is paid off, they are not required to carry fire insurance like homeowners with a mortgage must do.

Another California homeowner, Donna Yutzy in Magalia in Butte County, told CalMatters that she will pay higher premiums — almost $7,000 a year for both fire and home insurance — because she doesn’t want to risk having no fire insurance.

And Rebecca Reis, another homeowner who recently received a non-renewal notice because her San Francisco building was built before 1925, said her homeowners association will have to raise its dues to cover the increase in premiums for their building, from $7,000 to almost $30,000.

Newsom’s September order followed the failure of proposed legislation to address the crisis, and now California’s Department of Insurance is working on new regulations to try to fix the problems.

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The insurance industry cites a combination of inflation, climate change and several devastating and deadly wildfires since 2017, as well as what it calls outdated state regulations, as factors in carriers’ pulling back or pulling out of California.

There were a total of 8.73 million homeowners policies in 2021, and non-renewals of home and fire insurance policies climbed from 11% in 2018 to 13% in 2021, according to the state insurance department’s most recent data.

Orange County Register

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California homeowners bemoan high home/fire insurance costs

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