Lesley Muller said her jaw dropped when she received the renewal notice from the carrier that insures her Cloverdale home. The bill increased by $700 a year to $2,200.
“When I got it, it shocked me,” said Muller, a retiree whose insurance also covers her family’s cars and a home in Arizona.
She called her insurance broker, who checked with five other carriers who all declined to make an offer and said the only other option would be the state’s FAIR plan, which is the state’s last insurer. This option would be much more expensive for less coverage.
“So what do you do? Pay the high premium!” added Muller, who declined to name the carrier to prevent any fallout.
She is not alone.
Greg Lucas of Santa Rosa said his bill initially went up about 50% to $2,150 a year from CSAA Insurance. He shopped around but couldn’t find a better deal and ended up dropping the price to about 25% by increasing his deductible and reducing the amount of personal property coverage.
Torben Moller of Windsor renewed his policy with a 50% increase and added that he “can’t complain too loudly” because the fires have brought danger to carriers and there has been an increase in rebuilding costs.
These comments are just a small snapshot of what is happening across the state of California as insurance carriers have raised rates and reduced coverage to match the fire risk. That came on harsh terms locally with the 2017 North Coast wildfires that destroyed 5,334 homes in Sonoma County.
The threat has been going on for years throughout the Golden State.
“We’re seeing how badly consumers are hurt when there’s no competition,” said Amy Bach, executive director of United Policyholders, a consumer advocacy group based in San Francisco.
Her group conducted a survey of 584 respondents that found almost 98% experienced a price increase on their homeowner’s policy this year, many of whom saw their premiums double.
State Insurance Commissioner Ricardo Lara is trying to change the current status quo, which is on an unsustainable path if rate hikes continue and more homeowners leave. His office in February announced a proposal that would bring more transparency to how insurance carriers price fire risk and require them to take into account steps consumers and businesses can take to mitigate fire threats. such and to save money.
This may include actions such as clearing trees and shrubs around the structure or installing items that strengthen the home, including roofs that have higher fire protection with materials such as fiberglass-asphalt composite or steel.
Lara unveiled the guidelines that were compiled with the help of officials from the Governor’s Office of Emergency Services, Cal Fire and the California Public Utilities Commission. His second step is drafting final rules that require carriers to use that framework within the fire risk score, how they rate their policies.
The guidelines would be similar in practice to what Gulf Coast states already use to mitigate hurricane threats. It will also include steps taken at the neighborhood level with so-called “Firewise” communities, where local officials have taken actions such as identifying evacuation routes and clearing overgrowth to better curb fire risk – which include some in Sonoma County.
“We can make homes and businesses safer because there is a one-to-one relationship between security and the cost of insurance,” said Michael Soller, a Lara spokesman. “If we can close that gap, that’s the future of California. California’s future must not be more devastating wildfires.”
The rulemaking is the latest step after the 2017 wildfires to adapt to the increased spread of wildfires. The initial action was reactive as many local homeowners whose properties were destroyed or damaged nearly five years ago discovered they were grossly underinsured for the cost of rebuilding.
Others struggled over procedures to detail the loss of their personal property, while some ran out of coverage with their alternative living expenses before their homes could be rebuilt. Lawmakers responded by passing legislation that would provide greater consumer protection for those whose homes would be destroyed in future wildfires.
The focus now is to be proactive in the market to help protect homeowners between carrier rates for the highest frequency of fire threats and to help them better understand what is included in such formulas and how they can take steps to lower their bill.
Muller, for example, noted that she lives near a Cal Fire station but didn’t get any time off. “There was not a ton of transparency when I called my insurance company,” Lucas added.