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California Targets Nations First Wildfire Regulation To Lower Insurance Costs

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Sacramento, CA – A first-in-the-nation proposed regulation for tackling expensive home and business insurance will allow California owners to get a “risk score” to drive down costs.

As the heat-stricken state saw several wildfires ignite recently, California’s Insurance Commissioner Ricardo Lara is working to make the state the first to lower insurance costs for property owners who make improvements to reduce their fire risk. The regulation requires that insurance companies give premium discounts on residential and commercial coverage to customers who follow new insurance standards announced in February. They include having a fire-resistant roof, at least 5 feet (1.5 meters) of defensible space around a home, and removing vegetation overgrowth. Additional reductions would be required if the property is in a community that has taken steps to reduce wildfire risk.

In a statement released by Lara, he noted that the new regulations “will help more Californians find insurance they can afford” and “will save lives by helping California become safer from wildfires.”

Insurance companies would also be required to provide consumers with their property’s “risk score” and give them a way to appeal that score or classification assigned by the insurer. That is a disclosure that the California Association of Realtors has long been pushing for and has praised as part of the regulation. But the advocacy group Consumer Watchdog argues the pending regulation does not go far enough as it still allows insurers to drop property owners’ insurance entirely if they deem the site too risky.

“My regulation is the result of listening closely to the needs of consumers and businesses and crafting common-sense, lasting solutions that strengthen our ability to protect Californians from the threat of climate change-intensified wildfires,” countered Commissioner Lara.

CAL Fire has touted that the retrofits and landscaping requirements for individual properties will augment the $300 million the state is spending to prepare communities for wildfires.

The California Office of Administrative Law has 30 working days to make sure Lara complied with proper administrative procedures before the regulation can take effect.