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Possible Relief For Skyrocketing Fire Insurance In California

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Sonora, CA — As the cost of insuring homes has continued to climb due to consecutive years of catastrophic wildfires in California, state regulators may have come up with a relief plan.

On Monday, Insurance Commissioner Ricardo Lara announced a step toward creating incentives for retrofitting older homes to make them more resilient to fires, cutting down costs. Lara’s office will work with four state agencies charged with wildfire response and prevention to establish statewide standards for home hardening. The participating agencies include the Governor’s Office of Emergency Services, the California Department of Forestry and Fire Protection, the California Public Utilities Commission, and the Governor’s Office of Planning and Research.

Lara called the convening of fire safety, disaster and insurance experts to determine the mitigation standards “long overdue.”
Those changes including things like replacing single to dual-paned windows to creating fire-resistant landscaping to reduce wildfire risks and make insurance more affordable and available in California.

“I want to see companies reward efforts by putting money back into (homeowners’) pockets,” asserted Lara.

This comes in the wake of insurance providers increasingly dropping coverage in fire-prone regions of the state due to heavy losses incurred from some of the most destructive wildfires in the state’s history. Lara’s office cites this recent data that showed, between 2018 and 2019 insurers dropped residential policies statewide by 31%. At the same time, the state’s FAIR Plan, which is a bare-bones fire insurance plan of last resort, has seen a hike of 225% in enrollment.

Lara has been pushing for incentivizing home hardening as a solution to the growing crisis, using the example of safe driver incentives where car owners that demonstrate they are safe drivers, can usually get a discounted rate from insurance companies. He notes that the state’s FAIR Plan and a few insurance companies offer discounts for homeowners who make improvements to protect against fires. But Lara stated that he wants to see broader discount programs with a uniform set of standards, based on scientific research, as a way to give homeowners, communities, and insurance companies a shared strategy for reducing wildfire risks.

“Both consumers and industry should embrace mitigation because we are at a crossroads, where we all realize that we have to reduce the overall fire risk and unfortunately, fires are not going to go away anytime soon,” remarked Lara.

Insurers paid over $26 billion in claims for the 2017 and 2018 wildfires, and an estimated $7 billion for last year’s wildfires, according to the Property Casualty Insurance Association. Some of its findings for reducing a home’s risk of catching fire can be found here.