California Bans Insurance Companies From Dropping Homeowners in Wildfire Zones

The one-year moratorium is a stopgap measure to assist homeowners affected by recent wildfires as the state assesses ways of addressing the root causes of increasingly damaging natural disasters.

1 minute read

October 3, 2021, 9:00 AM PDT

By Diana Ionescu @aworkoffiction

California Wildfire

Jeff Turner / Wikimedia Commons

In an effort to help homeowners affected by recent wildfires, writes Dale Kasler, California has imposed a one-year ban on insurance companies dropping homeowners in recent fire zones from their insurance policies. The moratorium, which includes areas affected by the Dixie, Caldor, and other 2021 fires, "came a month after Lara imposed a similar moratorium affecting 25,000 homeowners who live in the vicinity of the Lava and Beckwourth Complex fires." 

The ban includes parts of 22 Northern California counties and about 325,000 homeowners, but Insurance Commissioner Ricardo Lara "acknowledged that the moratorium isn’t a cure-all for the breakdown of the property-casualty insurance market in areas prone to wildfires," but rather short-term relief for a long-standing crisis. "The insurance commissioner has been negotiating with the industry to find ways to stabilize the rural markets," where homeowners often have to resort to the state's FAIR plan, "which sells bare-bones policies that insure only against wildfire risk. By the time they’re finished purchasing separate policies covering burglary and other perils, their annual insurance bill has doubled or tripled, costing them thousands."

"Among other things, negotiators are trying to establish standards for home and community “hardening” — including fuel breaks, building retrofits and other measures — that would bring insurers back into areas they’ve been deserting."

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