Castaic condo owners see nearly 900% increase in fire insurance premiums

Homeowners at a Castaic apartment complex were hit with a massive rate hike for fire insurance, with rates going from roughly $40,000 a year in 2020 to nearly $450,000 in 2022.

Last year, Jessica Carson and her husband bought their first home, a three-bedroom apartment in Castaic.

“This is our home and we feel like we’re being forced out and we don’t want that to happen,” she told CBSLA.

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Reasons the Carsons might have to leave their new home was the nearly 900% increase in the complex’s fire insurance policy. The premium was $43,000 in 2020 and increased to approximately $430,000 in 2022. Homeowners have now been told by their homeowners association that they must each pay an assessment of $5,000 to cover the rate increase.

“We’re both working parents, middle class, and we’re being asked to pay this extra money that we just don’t know where it’s going to come from,” Carson said.

Some of the other homeowners have already decided to sell.

“There are some units that are trying to sell, and we’ve seen them come in and out of storage and price drops that are hurting companies for the rest of the community,” said apartment owner Kyle Kurtz.

For its part, the HOA said it tried to find a cheaper insurance policy, and the CBSLA counted 27 rejections from major insurers.

“We actually got two more quotes, one for $800,000 and another one was $900,000,” Carson told CBSLA.

Harvey Rosenfield, with Consumer Watchdog, authored Prop 103 in 1987, which led to stricter regulations on insurance companies in California.

“Here’s what I think,” Rosenfield said. “I think insurance companies are taking advantage of a crisis to create their own crisis in the market, overcharging people, refusing to renew.”

Rosenfield also co-authored a study released Monday that claims some major insurance companies are inserting illegal provisions into their fire coverage policies as a way to deny claims and reduce what they pay out in claims.

“It’s like you suffer the destruction of a fire and then what the insurance companies do to you is also a disaster,” he said.

Consumer Watchdog is also calling out the insurance commissioner, saying he approved these illegal provisions. Asked for comment, the insurance commissioner’s office released the following statement:

“As the consumer protection agency for the nation’s largest insurance market, the Department of Insurance enforces laws that require claims to be handled fairly, resulting in $166 million being returned to California consumers last year alone.

These claims are 100% false. The Department does not approve any part of an insurance company’s fee submission that conflicts with California law.

We exercise oversight, and when insurers violate the law, we conduct a thorough investigation and hold them accountable, as demonstrated by the Department taking corrective action against the California FAIR Plan and the Nationwide Wildfire Claims Handling Group.”

In response to the rate increase for the Cimarron Oaks HOA in Castaic, the Insurance Department released this statement:

“The department is still gathering information in order to conduct a full investigation into the complaint we received from the Cimarron Oaks Homeowners Association. As this is an ongoing investigation, I am unable to comment further. We we urge all Californians who have concerns about their insurance policies to contact us for immediate assistance at 800-927-4357 or via the online chat at insurance.ca.gov where you can also initiate a complaint.”

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