Realtors Report ‘Epidemic’ Of Fire Hazard Related Insurance Cancellations
Sonora, CA — Mother Lode realtors are raising a red flag warning over increasing difficulties local residents are experiencing as more insurance companies bail on providing homeowners coverage due to wildfire risk.
Tuolumne County Association of Realtors (TCAR) President Judy Austin tells Clarke Broadcasting that realtors in her office are sharing stories of recent cancellations they have personally experienced.
“One of my agents who just got cancelled two years ago went with another insurance company that accepted him — and he recently got cancelled again,” she shares. Another agent, who was paying $1,500 a year for his policy, also suddenly found himself without coverage and found insurance through local brokers for more than double the price.
Locally, Austin confides, “I am hearing that almost everyone is getting their homeowners policy cancelled or not renewed and they have to go with another additional policy, such as the California FAIR Plan on top of it, so it is tripling their insurance premiums, and for people on a fixed income, that could be a $500 a month increase.”
State Insurance Commission officials advise consumers that the FAIR plan, which provides only gap coverage, is a “last resort” after a diligent search for traditional insurance market coverage is otherwise unsuccessful.
Tuolumne County ‘Highest Risk’ Area For Insurers
Those who have not heard from their insurers lately are not necessarily in the clear, since many companies in the process of weighing their risks may yet decide to lower the boom on their customers living high hazard fire areas. Austin is worried because insurers have told her that Tuolumne County holds the highest risk for insurance companies in the state.
“It is becoming an epidemic that is affecting homeowners and potential purchasers,” Austin stresses. “With these insurance policies going so high, what we are seeing…in the field is, if we are working with a buyer…we have to investigate what the insurance is going to be on that property, because it could bump them out of being qualified for a loan…it would adjust their debt-to-income ratio.”
In some cases, homeowners faced with purchasing a more expensive coverage are, in some cases, having to settle for a policy that offers less coverage and protection in case of a catastrophe. Additionally, Austin points out, “We have a lot of elderly homeowners on a fixed income. If these people get dropped, then we are going to see people not renewing, having no insurance on their homes — that could be devastating.”
She says industry leaders at California Association of Realtors are taking up these related issues at a statewide meeting coming up on May 1. Ahead of it, Austin is collecting as many stories as possible to bring to the sessions, during which officials will be discussing their mounting concerns with state legislators.
After the state meetings, TCAR also plans to convene a special local session with insurance brokers to swap information, ideas, and insights. Among Austin’s thoughts is a recent article she read in which the writer compared insurance companies’ blanket moves to cancel policies with the illegal practice of “redlining,” or discrimination based on racial or income characteristics.
Discriminatory ‘Risk Management’ Moves In Play?
“We are hearing of insurance companies that are cancelling policies without coming out to walk the properties…in the Sierra Foothills, homeowners who have never had a claim on their policy in 30 or 40 years are now having their policies cancelled,” Austin laments. Yet, many homeowners are doing more to make their homes more fire-safe, including one of her colleagues, who lost his coverage, despite having fire clearance and a hydrant on the back of his property.
As part of Clarke Broadcasting’s Fire Prevention Series on Mother Lode Views, News Director BJ Hansen recently interviewed officials about the Tuolumne County Fire Initiative, which is tackling numerous health, safety, planning and economic issues related to the county being located in a high fire hazard area.
Among those interviewed, County Administrative Officer (CAO) Tracie Riggs shared that residents’ homeowners insurance cancellations, which began occurring in the wake of the 2013 Rim Fire, continue to be an ongoing and frustrating problem. Engaged at the state level with officials, including with the State Insurance Commission, the county is additionally working with homeowners on fire-safe practices and improvements. To hear the discussion, click here.
Austin encourages Tuolumne County homeowners who have or are experiencing issues with finding or keeping insurance coverage due to wildfire risk to share their stories so she can share them with state government and industry officials. You can email them directly to her at firstname.lastname@example.org or email@example.com.
For State Insurance Commission resources, click here.