What happens when neither insurance providers nor government insurance commissioners advocate for homeowners? That's the terrifying question facing many Californians, who find themselves in an untenable situation when it comes to home insurance.
What's happening?
A press release from nonprofit Consumer Watchdog outlined criticisms of the state's insurance commissioner, Ricardo Lara. These criticisms were made at several simultaneous hearings, all of which addressed the soaring premiums and opaque negotiation tactics happening under Lara's oversight.
One resident, Bruce Breslau, shared that his HOA had faced a 400% increase in premiums due to insurance scares over wildfire risk: "My homeowners association premiums went from $175,000 four years ago to $1.7 million today."
But, he lamented, "It's outrageous that insurance companies can gouge us when our community has worked to protect ourselves from fire risks. There is no relief in sight for our community."
Others pointed out how new regulations will allow companies to use "secret algorithms" to determine price hikes, leaving them totally unaccountable.
Consumer Watchdog's founder, Harvey Rosenfield, said, "Lara promised Californians that he will require insurance companies to cover homeowners in 85% of the wildfire areas. Lara lied. His regulation will allow companies to increase coverage for only 5% of people in those areas – or not at all, if an insurance company says that it is already in compliance, or claims it is not yet ready to comply."
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He called the new regulation "an outrageous bait and switch," explaining that homeowners "will be paying hundreds and potentially thousands of dollars more for their home insurance under his plan."
Why is this insurance failure so concerning?
Aside from the financial risks this poses for California homeowners, this is the signal of a broader pattern that has been occurring around the country.
Many insurance providers are skittish about continuing to cover residents in disaster-prone areas, as the repairs for frequent damage are becoming astronomical. Unfortunately, this often leaves homeowners with no viable option other than moving out of state entirely.
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But with climate-fueled weather continuing to escalate in every part of the world, many officials worry that these issues — now more limited to coastal and fire-prone regions — will soon impact homeowners everywhere.
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What's being done about this?
Many states offer a public insurance plan, though it's generally seen as inadequate. Consumer Watchdog quoted another resident, Gigi Bannister, who said, "The plan on the table will mean only greater rate hikes and no better coverage for people like me."
Instead, many are calling to create a public insurance model for climate pricing, which the press release described as "transparent and accessible to the public so consumers can understand their own climate risk and can be confident their rates are fair."
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