California wildfires continue to scorch the Golden State’s southern cities, and now officials in the state fear that some insurers will drop homeowners’ coverage.
Wildfires in Southern California and earlier this fall in northern California have resulted in billions of dollars in claims. In the Sierra Nevada foothills, many homes were dropped after wildfires swept through in recent years, and some northern California homes also have seen their coverage dropped, California Insurance Commissioner Dave Jones told Reuters.
“We may see more of it,” Jones cautions.
Insurers are required to renew fire victims’ policies once. After that, homeowners could then be forced to go to specialty insurers, known as “surplus line carriers.” The policies can sometimes cost up to 40 percent more than mainstream insurers.
Dan Nichols of Oroville, Calif., told Reuters he was shocked when Liberty Mutual dropped his insurance this year after a wildfire in the area.
A spokesman for Liberty Mutual told Reuters that the insurance company must “responsibly manage” its overall exposure to California’s wildfires as part of a strategy to safeguard its ability to pay homeowners’ claims. The spokesman says the insurer still issues policies in California, and its strategy is not in response to recent fires.
Insurers need to be cautious about not covering too many homes in one area, Janet Ruiz, spokeswoman for the Insurance Information Institute, told Reuters. “They tend to spread their risk so they can pay claims,” Ruiz says.
Jones says the state will be reviewing new computer models to take into account climate change as the wildfire season presses on unusually long this year.
Source: “As California Fires Blaze, Homeowners Fear Losing Insurance,” Reuters/CNBC (Dec. 18, 2017)
