Experts are warning trouble could be on the horizon for homeowners, renters, and businesses as insurance nonrenewal notices continue to rise in the Golden State.
What's happening?
KABC reported that more and more Californians are unable to hold on to traditional residential and fire insurance policies, with approximately 2% of policyholders receiving nonrenewal notices in 2023.
"Two percent may sound like a small fraction, but it translates to tens of thousands of California property owners losing home or fire insurance," KABC wrote.
The investigation's analysis of 2023 data from the California Department of Insurance also revealed that nonrenewal rates were high in communities later impacted by January's Palisades and Eaton fires, which destroyed an estimated 12,000 homes. In the Pacific Palisades, 8.3% of policyholders were denied renewals, while Altadena saw a 7.5% nonrenewal rate.
Why is this important?
If they didn't receive nonrenewals, residents in wildfire-impacted communities also faced sky-high premiums prior to the destructive blazes. This can price some people out of the area.
Others like Will Chandler, who lives in Altadena, told KABC he decided to go without coverage after his insurer raised his premium by $800 annually. Because of this, he was hesitant to leave his home when the January blazes began.
"I felt like I needed to do everything in my power to protect the home," Chandler said of the dangers he faced as he tried to extinguish the flames himself.
When insurers pull out of areas or raise their premiums, the cost also falls on other California residents. For instance, Uve Karbenk, who co-owns a 33-unit residential building in San Bernardino, had to scramble to find coverage after his insurer canceled his policy, per KABC.
Ultimately, he had to settle for out-of-state "piecemeal" coverage that increased his premium from around $14,500 to roughly $42,000, meaning new renters would need to shoulder the bill.
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Definitely 🙁 "For new tenants, it definitely has to go up," Karbenk said.
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"It is going to stay very challenging for the foreseeable future for California, not just for homeowners, but for business owners, too," added Amy Bach of the nonprofit United Policyholders.
What's being done about this?
California's FAIR Plan is helping provide coverage to homeowners who can't find private coverage. However, the plan is pricey, so it's not an ideal permanent solution.
Ultimately, one of the key factors driving premiums higher or leaving people desperate for coverage is the increased frequency and severity of extreme weather events, as rising global temperatures are supercharging our weather.
In the long term, reducing pollution from dirty fuels — the primary generator of heat-trapping gases — can bring the planet back into balance. Simple actions at home to contribute to a cooler future include upgrading to energy-efficient tech, like LED light bulbs.
In the short term, homeowners may choose to rebuild with fire-resistant materials, thereby increasing the chances of their dwellings surviving a fire.
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