California Wildfires Affect Californians From Getting Insurance


This ARTICLE On California Wildfires Affect Californians From Getting Insurance Was PUBLISHED On October 12th, 2019

California Wildfires
Gustan Cho Associates

The frequent California Wildfires is affecting homeowners to get homeowners’ insurance. Existing homeowners are experiencing skyrocketing premiums of their homeowners’ insurance. Many homeowners cannot get insurance after the California Wildfires.

More than 350,000 Californians cannot get business and homeowners property and casualty insurance after California Wildfires.

  • As California Wildfires continue and become more common, the situation will become worse
  • The California Insurance Commissioner is predicting much worse situation in the near future for Californians
  • Homeowners are not too happy
  • All lenders require homeowners insurance as a condition of funding a mortgage
  • Insurance companies holding consumers hostage will affect home buyers and homeowners needing a mortgage

In this article, we will cover and discuss how the California Wildfires affect homeowners and homebuyers.

The California Wildfires Left Many Homeowners Without Insurance

Why The California Wildfires Left Many Homeowners Without Insurance

California Wildfires is very common throughout the state.

  • Areas affected by wildfires are affecting homeowners where the insurance company is cutting them off
  • Many residents who were affected by the California Camp Woolsey Wildfire last year where 86 people died and destroyed over 18,000 parcels do not have homeowners
  • Hundreds of thousands of residents in this area are without homeowners insurance
  • Hundreds of thousands of homeowners are affected by not having homeowners insurance
  • Mortgage companies do not care about these property owners not having insurance

They are pretty much saying good-bye to them and have nothing to do with insuring properties in high-risk fire areas.

What Experts Say About Liability Of Homeowners

What Experts Say About Liability Of Homeowners

California State Insurance Commissioner Richard Lara said the following:

Like many other residents, many homes that are located on the so-called “interface” between suburb and woodland, where California’s dry brush and beetle-ravaged trees stand side-by-side with expensive homes worth an average of half a million dollars are affected by insurance companies canceling their homeowners insurance. Given this scenario, property-casualty insurance companies are refusing to insure more than 350,000 homeowners in 10 counties seen as vulnerable to fires, according to published reports. We are seeing an increasing trend across California where people at risk of wildfires are being non-renewed by their insurer. Among their concerns, consumer groups says, is that loss of coverage could create a domino effect of declining home values because it’s impossible to obtain a mortgage without homeowners insurance. That could scare potential buyers, as well as make it tougher for current homeowners to refinance their properties. The insurers have to come up with a better response than simply canceling policies. They are holding us hostage, because you have to buy their product.

Residents affected by insurance companies are complaining to the state to do something about this. More than 250,000 properties in this area are being affected.

Wildfires Are Affecting Many Homeowners

Why this happens with Wildfires Are Affecting Many Homeowners

Homeowners Insurance has been difficult to insure by many Californians for years.

  • However, it became more difficult and costly after California Wildfires became more common during the 2015 through 2017 seasons
  • After the 2018 California Wildfires, more than 10% of homeowners lost insurance coverage
  • This includes homeowners not affected by California Wildfires
  • The 2018 wildfires were hands down the most devastating with over 103 lost of lives
  • Over 2 million acres were affected by damage due to the 2018 wildfires

The current 2019 California Wildfires will not doubt further impact California homeowners.

How Not Having Insurance Affect Homeowners

How Not Having Insurance Affect Homeowners

The California Wildfires affect homeowners not being able to get insurance will lead to a downward effect on them.

  • Not being able to get homeowners’ insurance and/or get renewals will plummet home prices
  • This will affect towns and communities in affected areas by reducing tax revenues
  • Insurance companies are already filing insurance rate hike requests with the California Insurance Commissioner’s Office
  • Insurance premium hikes are supposedly substantial
  • Insurance companies paid out over $26 billion in claims from the 2017 and 2018 wildfires

Experts warn that their homeowner’s insurance can triple or quadruple. It will not be uncommon for homeowners who have been paying $1,000 in homeowners insurance have their premiums go over $4,000 plus.

Options For California Homeowners

California homeowners who cannot qualify for reasonable homeowners insurance often buy insurance with “FAIR” plan. The FAIR plan is the last resort in getting insurance in the state. The FAIR Plan covers bare-bones coverage. It normally does not include coverages like theft, wind, water, and earthquake. This insurance plan has seen a 200% increase in policyholders since the California Wildfires of 2015 through 2018.

Mike Gracz, the National Sales Manager at Gustan Cho Associates and California Housing Expert said the following:

Between 2015 and 2018, there was a 225% increase in homeowners residing in the state’s 10 “high risk” counties who were forced into the FAIR plan. In the past, regular insurers told homeowners they could lower their premiums – or avoid going into the state’s FAIR plan – by building a “defensive dome” around their properties. That involved clearing away brush, trees, and bushes; moving lawn furniture; spraying fire retardant; and replacing cedar shake roofs and other burnable substances with non-flammable products.  Now, armed with drone data that shows where the next big blaze is likely to happen, insurers simply cancel policies. They are admitting that nothing will work when there’s a firestorm.

There is a lot of resentment between homeowners and the insurance companies. Insurance companies do not like losing money. Homeowners do not want to pay triple or quadruple the premiums they are currently paying. This is a developing story from Gustan Cho Associates Mortgage News.

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