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More than 348,000 California homeowners insurance policies in wildfire risk areas have been dropped since 2015, according to data released by the California Department of Insurance. Wildfires can cost California insurers billions of dollars, and as a result, companies are increasing rates or dropping high-risk policyholders.
The Camp Fire in 2018 is the most destructive California wildfire to date. It destroyed more than 153,000 acres and nearly 19,000 structures. Last year, California experienced more than 8,000 fires that caused more than $18 billion in damage.
With more destructive wildfires, it’s likely more California homeowners could be dropped by their insurance companies. In areas prone to wildfires in California, your home insurance company will likely either increase your home insurance rates when it comes time for you to renew or not renew your policy. If your California homeowners insurance cancels you, find out what you need to do.
What can you do if your home insurance company drops you?
It can be difficult for California homeowners to find home insurance in areas at risk of wildfires. If your California home insurance company has dropped you, you’ll need to start looking for new coverage ASAP to avoid being uninsured.
Here are four things you can do if your California homeowners company has canceled your policy:
- Get quotes from other California homeowners insurance companies
- Talk to your neighbors to see what company they use
- Call the California Department of Insurance
- Look into home insurance with the California FAIR plan
Get quotes from other California homeowners insurance companies
If you’ve been dropped by your homeowners insurance company in California because of the wildfire risk in your area, you may be able to find another company to insure you. All insurance companies have different standards to determine who to insure. To start, go through our California homeowners insurance rankings to find the best companies according to consumers and get quotes.
Make sure you try to get quotes from many different companies. Home insurance rates in areas of high fire risk are pricey, so this can help you find the best price for your policy. If you previously used an insurance agent, you can see if your agent can help you get quotes.
Talk to your neighbors to see what company they use
You can turn to your neighbors and others who live in your area to see which home insurance company they have to protect their home. See if they’ve been dropped by their insurance company or if they’ve had luck with any company in particular. This can help you find a company that may be able to cover your home despite your risk.
You can also ask neighbors what insurance agent they use and find out if the agent was an expert in finding policies for your specific risk.
Call the California Department of Insurance
The California Department of Insurance can provide you with insurance help and resources. The department may be able to provide you with a list of insurance companies that sell policies in your area or offer you information about other options for high-risk homeowners that live in wildfire risk areas.
You can call the California Department of Insurance at 1-800-927-4357.
Look into home insurance with the California FAIR plan
The California FAIR plan is a last resort for California homeowners who need insurance. It stands for California’s Fair Access Insurance Requirements plan. If you’re unable to get insurance from the voluntary insurance market in California, you can get home insurance through the FAIR plan.
The FAIR plan is an insurance pool. It covers damage to your home caused by fire, riot and windstorm. California FAIR Plan does not cover personal liability, theft, flood, earthquake, hail or vandalism, so you won’t have the same level of coverage as your previous insurance. In California, FAIR plan insurance covers damage and destruction from brush fires.
Before you try to get coverage with the FAIR plan, make sure you’ve tried to get home insurance quotes from many California private homeowners insurance companies. Once you’ve exhausted all other options, you can apply for homeowners insurance through the FAIR plan. Make sure you meet the submission guidelines before applying.
There are requirements in order to get insurance through the FAIR plan. You may be asked to make improvements to your home to better protect it from fire, theft, water damage or more. Some examples include updating your electrical wiring or repairing your roof.
If you end up getting coverage from the California FAIR Plan, you should shop again in six months to see if you can secure coverage in the voluntary market. You’ll have limited coverage and higher insurance rates with the California FAIR Plan.
California home insurance laws
Living in a high risk area is one of the main reasons homeowners insurance companies drop policyholders from coverage. But there are still laws that insurance companies have to follow before they cancel your coverage in California.
In California, a non-renewal notice must be sent to homeowners at least 45 days before cancelation. This is meant to give homeowners time to find coverage with another company or plan.
Gov. Gavin Newsom signed legislation into law in October that will require California homeowners insurance companies to give 75 days notice of non-renewals, rather than 45 days. However, this law won’t go into effect until July 1, 2020.
Additionally, insurance companies have a two year moratorium against canceling policyholders after a disaster, including a wildfire. This means that your insurance company can’t drop you after a covered loss for two years after it happened. However, after this, home insurance companies can drop you for living in a high-risk area.
Even if your insurance company doesn’t cancel your coverage, it may increase your rates significantly. In California, insurance companies need to get approval from insurance regulators before increasing your rates. This helps avoid extreme rate increases, though your rates can still increase significantly.
Which insurance companies are dropping California homeowners because of fires?
As many California policyholders across the state are experiencing non-renewal from their home insurance carrier or dramatic price increases, which companies are the ones dropping customers? We searched social media threads, online forums and news articles to see what California residents have reported. Note: this is by no means a comprehensive listing of companies, simply anecdotes we found in our research.
You can see numerous complaints about price increases and policy cancelations because of fires in California in the comments of our Facebook post about how the fires have affected California home insurance increases. The comment below is from a California homeowner who was dropped by AAA after 20 years.
In an interview with the Ventura County Star, two homeowners complained of non-renewal notices from their insurance companies last year. One homeowner had AAA and the other had Liberty Mutual. These policy cancelations are said to be a result of the insurers determining their homes too much of a fire risk because of their closeness to brush-heavy areas.
Paul Abate, a homeowner canceled by AAA after having a policy for 28 years, said to the VC Star, “I called the underwriter and he said that they changed their underwriting guidelines to state that any home within 1,000 feet of brush is an unacceptable risk.”
The VC Star reported that homeowner Jim Harrison was dropped by Liberty Mutual and was taken by surprise. The VC Star wrote that Harrison “received a non-renewal notice from Liberty Mutual earlier in the summer and was blindsided by the news, as the brush was not on his property.”
Even California residents who weren’t directly affected by any wildfires have seen an increase in homeowners insurance rates. The comment below is from a reddit thread: California homeowners face higher insurance costs after fires.
Even if you’ve had your insurer for many years, you could still be canceled and need to find a new insurer. Frances Mann Craik told CBS News that her homeowners insurance policy was canceled and she had the same coverage for 18 years prior.
Are you one of the hundreds of thousands of residents dropped by your home insurance company? Let us know if you were able to find home insurance coverage and how you did it in the comments section below. Or share your story in a review of your insurance company.
The content on this site is offered only as a public service to the web community and does not constitute solicitation or provision of legal advice. This site should not be used as a substitute for obtaining legal advice from an insurance company or an attorney licensed or authorized to practice in your jurisdiction. You should always consult a suitably qualified attorney regarding any specific legal problem or matter. The comments and opinions expressed on this site are of the individual author and may not reflect the opinions of the insurance company or any individual attorney.