UPDATE: Moratoriums on Canceling Fire Insurance for California Residents Only a Temporary Fix
EL DORADO COUNTY (KPIX) -- For three years in a row California's insurance commissioner has ordered temporary moratoriums following major fires to stop insurance companies from cancelling or not renewing policies.
KPIX 5 talked to homeowners not just in the Sierra foothills where the big fires are burning but also in the Bay Area where many communities are also at fire risk. We found a general consensus: While the reprieves are desperately needed, they only serve as a temporary Band-Aid for an ever-growing insurance crisis.
ALSO READ: California Orders More Insurance Options for Homeowners in Wildfire-Risk Areas
"It's like the hunger games really, you know? You're just waiting for your number to be called," said one El Dorado homeowner, who asked to remain anonymous.
Back in June she got the dreaded letter so many thousands of homeowners are getting that warned her policy would expire come September "due to wildfire risk assessment of dwelling location."
Then came the massive Caldor Fire that she says almost felt like a relief.
"We thought maybe this would be the best thing. If the house burns down then, we don't have to go through all of what everybody's going through where we live," she said. "So many people that I know have already had their insurance rates doubled, tripled and quadrupled."
Her home survived and the fire turned out to be a blessing in disguise. That's because last week, the state imposed a one-year moratorium on home insurance cancellations and non-renewals in or near each of this year's major fires, including the Caldor Fire.
Since her zip code was covered and her policy was still in effect she says Nationwide agreed to reinstate her for a year, covering the duration of the moratorium.
"It provides my family extra time to sort out what we want to do," she said.
"We're seeing this, unfortunately becoming much more of a problem," said California Insurance Commissioner Ricardo Lara. He introduced the bill that created California's insurance moratorium law when he was state senator. It kicks in every time the governor declares a state of emergency.
"What this gives us really is a reprieve to homeowners, and also gives the insurance companies an opportunity to re-evaluate their entire portfolio," said Lara.
Portfolios are already getting re-evaluated. More than 235,000 California homeowners got dropped by their carriers in 2019 according the latest available data. That marks a 25% percent increase from the year before, and not just for residents of the Sierra foothills.
"It's a huge huge problem," said Melanie Light, a homeowner in Orinda in an area that is classified as a "Wildland Urban Interface" or "WUI." The Bay Area has dozens of WUIs that are in the cross hairs of property insurance companies because of the high-fire risk.
In Orinda alone, 284 policies were not renewed in 2019, up 30% from the year before. And Light says she has talked to many more homeowners that have been dropped since then.
That despite a one-year moratorium imposed after the Sky Fire burned nearby. That moratorium expired last December.
"It's like manna from heaven to have a break and know that for one year, you are ok. But I don't think it solves the problem, and it may even make insurers more risk averse," said Light.
"The insurance industry has been paying out billions of dollars in losses. So the rates need to become adequate with the risks that we're seeing today," said Mark Sektnan, vice president of state government relations for the American Property Casualty Insurance Association.
KPIX 5 asked him what the long term solution is. Sektnan's response: "I think we have to go down to what the real issue is. Insurance is not the issue. It's a symptom. The basic problem is that we have an environment that is changing, that is becoming more risky. And one of the things we need to do is address that risk."
That's what Light is doing. She formed the Orinda Firewise Council, which provides residents with tips on home insurance and fire prevention.
"It's not a guarantee that we'll be protected or we'll be safe from a fire, but we're safer when we're united together," said Light.
She still has her insurance, but the next door neighbors just lost theirs.
"She has the same carrier that we do. and I'm just, you know, praying every night that we don't get canceled," said Light.
Back in El Dorado County, the homeowner KPIX spoke to knows it's just a matter of time.
"We have a year. We're not under some false pretense that this is going to be for longer than a year. I don't think that the community where I live is going to afford living here much longer," the homeowner said.
Homeowners who can't find traditional insurance can fall back on the state FAIR plan, which provides basic fire coverage for high risk properties.
For more information and a list of zip codes covered by moratoriums, visit the California Department of Insurance website. For more information on other insurance options in the state, visit uphelp.org.
