Wildfire Season Is Here, and More Homeowners Are Losing Insurance

California homeowners with mortgages are required by law to have home insurance, leaving many to scramble to find a new plan before a potentially devastating blaze hits.
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Charred trees stand where the 2007 Angora Fire scorched 3,100 acres and destroyed 254 homes near South Lake Tahoe, California.

Charred trees stand where the 2007 Angora Fire scorched 3,100 acres and destroyed 254 homes near South Lake Tahoe, California.

As Californians brace for the height of this year's fire season, more and more are losing home insurance or facing dramatic increases in their premiums. California homeowners with mortgages are required by law to have home insurance, leaving many to scramble to find a new insurance plan within the state-mandated 45-day period and to avoid losing everything before another devastating blaze hits.

Data from the California Department of Insurance shows complaints of policy cancelations have doubled in the past two years and increased by over 570 percent since 2010, the Los Angeles Times reported. But rising risks and costs for homeowners reflect what insurers are experiencing: State figures showed damage done by the 2018 wildfires alone resulted in $13 billion in losses for insurance companies.

More rural residents are turning to the California FAIR (Fair Access to Insurance Requirements) Plan, a last-resort home insurance option with high premiums that only covers up to $1.5 million in losses. Others, like Sarah and Tom Fugate, found a new plan with an international specialty insurance provider.

Jackie Botts interviewed the Fugates, a couple living in California's Sierra Nevada Mountains, about their situation for Pacific Standard in her August of 2018 story, "As Fire Seasons Intensify, California Homeowners Struggle to Stay Insured." Despite the Fugates' efforts to safeguard their home (building it of fire-resistant materials, diligently clearing out brush, and cutting down trees that grow too close together), they lost their state-regulated home insurance in 2017.

These days, insurance companies often measure the risk of insuring a home through technological models developed by out-of-state software companies that use easily accessible data gleaned from satellite images—like proximity to high-risk areas, type and distribution of surrounding vegetation, and the slope of a property—to determine a home's fire risk level. The software companies say individual mitigation efforts would be nearly impossible to incorporate into these models, Botts reported. This leaves people like the Fugates out of luck:

When Lloyd's [their new insurance provider] told the Fugates that their fire risk score was a six out of 10, at first Sarah Fugate was upset. After all, they'd poured money and time into making their home as safe as possible. But then she typed her address into Google Maps. At first, she could see the top of their roof and the area they had cleared around their house. But as she zoomed out, she watched as the pinpoint of their roof disappeared into dense forest that spread out for miles.

"When you look at it that way, you say, OK, I kind of understand'," she tells me with a chuckle.

California Insurance Commissioner Dave Jones proposed legislation that would require wildfire risk models to account for homeowners' mitigation efforts. A version of one bill, Senate Bill 894, passed in September of 2018, though it included none of the original provisions to require insurers to give discounts and continued coverage to homeowners who invested in their home's fire safety.

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