It’s a new year, but insurance companies continue their retreat from wildfire-prone areas of California.
Home insurers have declined to renew policies for tens of thousands of homeowners across the Golden State, after paying out more than $24 billion for wildfire losses in 2017 and 2018.
That’s impacting the housing market, according to real estate agents and homeowners.
The California Association of Realtors found in a survey of its members last year that 27% had issues with fire insurance either personally or with their clients. Within that group, 34% had a potential buyer decide not to buy because of the difficulty of finding fire insurance.
“We’re just going to get a bunch of houses sitting on the market that won’t sell,” Pollock Pines, Calif. realtor Lauralee Green told the Wall Street Journal.
Insurance agent Aurora Mullett estimated that 75% of the homes in El Dorado County, located in the Sierra Nevada along the shores of Lake Tahoe, cannot buy standard home insurance, the WSJ said.
Regulators expect more nonrenewals in the coming months, the WSJ reported.
Current or potential homeowners can obtain insurance from the state’s “insurer of last resort,” the California FAIR Plan.
FAIR Plan coverage is more costly than traditional insurance and excludes standard coverages like liability and theft. To fill the coverage gaps, homeowners must buy a separate “wraparound” policy, further adding to their insurance expenses.
Currently, the insurance industry-backed FAIR Plan is in a legal fight with Insurance Commissioner Ricardo Lara.
In December, Lara ordered the FAIR Plan to offer comprehensive policies. The commissioner also ordered the plan to double the amount of coverage a customer can buy, to $3 million.
The FAIR Plan is asking the courts to block both orders.
