February 7, 2023


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Can ‘fire hardening’ solve California’s home insurance crisis? |

Sue Ladich spent $1,600 clearing brush and trees from around her home in 2014. In 2017, she ponied up $3,500 to clear even more potential wildfire fuel from her property. This year, she spent another $2,200. 

But the more than $7,000 and countless hours of work spent in the name of keeping her Truckee home safe from wildfires added up to nothing in the eyes of insurers.

Californians across the state are taking measures to help save their homes from the state’s ever-worsening fires and satisfy risk-averse insurers, but many, like Ladich, are seeing their homeowners’ policy cancelled or premiums jacked up anyway. 

“When the local fire department or the Forest Service comes by to inspect our property, we pass with flying colors — they don’t have a single recommendation,” Ladich said. “In my conversations with insurance companies, I’ve raised these items to try to plead our case — it doesn’t make a difference, it’s like they don’t even care to hear these details. They just have a set map and they say, ‘Nope, we’re not insuring in that area.’”

Ladich has been dropped by two companies in three years, and when the third insurer proposed raising her premium from $5,000 to $11,000 this year, she finally gave up and joined the California FAIR plan, the state’s barebones fire insurance plan of last resort. 

She’s far from alone. Homeowners like Susie Williams in Tuolumne County and Lucy Smallreed in Marin have also been dropped by insurers despite efforts at making their homes safer. In 2019, policy cancellations statewide rose by 61{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb}, and the state’s 10 most fire-prone counties saw a 203{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} increase. Enrollments in the FAIR Plan jumped 225{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} last year. 

Insurers say it’s simply too risky to write policies in these regions — payouts from the 2017 and 2018 fire seasons alone totaled $24 billion, almost completely wiping out the industry’s profits for the previous 16 years. 

It’s likely some homeowners would choose to reduce their risk against fire — a practice known as home hardening — regardless of the insurance implications, but state regulators are increasingly eyeing the practice as a potential solution to the burgeoning insurance crisis. In fact, they’re considering whether — and how — to institutionalize it. 

Insurance Commissioner Ricardo Lara backed a bill this year, AB 2367, that would have required insurers to renew policies for homeowners that met state standards for hardening their home against wildfire. It died in committee after strong opposition from insurers, and Lara has since said he plans to use regulatory powers to create an insurance program that incentivizes California homeowners to take mitigation measures. 

In an October hearing on the insurance crisis and in interviews with CalMatters, both consumer groups and insurance companies indicated that, as a long term solution, they support creating an insurance-based mitigation program. They disagree, however, on the logistics of such a system and whether the state is ready to move that way now. 

The fundamental questions that need to be answered are: 

  • Who will certify that homeowners meet mitigation standards? 

  • How will those standards be determined?

  • Will insurers be allowed more flexibility to adjust rates in conjunction with such a program? 

(James Bikales, [email protected], is a health intern at CalMatters, California’s publicly supported news service.)