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How California Wildfires Affect Real Estate Insurance

California real estate attorney

California wildfires pose a threat even to homeowners whose property is safe from the flames.

That’s because many insurance companies are expected to either not renew policies or to simply stop writing homeowner policies in areas with the highest fire risk, California Insurance Commissioner David Jones recently told The Associated Press. Rate increases also are likely, he said, as well as the reclassification from safe to high-risk for parts of the state.

"We are not at a crisis point yet, but you can see where the trends are going," Jones said.

Why are real estate insurance companies dropping homeowner policies?

For many, the trend is already here, thanks to the wildfires that have ravaged the state in recent years. Homeowner complaints about being dropped by insurance companies more than tripled from 2010 to 2016. Another glaring statistic: Insurers dropped more than 10,000 policies in the 24 California counties with the highest fire risk in 2016.

Oak Park resident Paul Abate said he is at a loss to understand the situation. He told The Ventura County Star that his insurer said “any home within 1,000 feet of brush is an unacceptable risk.” Asked Abate: “Where in California isn’t there a risk of wildfire? They want to insure people that don’t have a problem.”

Fellow Oak Park homeowner Jim Harrison received a non-renewal notice from his insurer earlier this summer.

“I don’t know who to turn to, and the insurance drops seem somewhat random, and it makes me wonder if companies are going to pull out of California completely,” Harrison told The County Star.

Unfortunately, the California Department of Insurance does not have the authority to prevent insurers from dropping their clients, according to spokeswoman Nancy Kincaid. She did note, however, that the state offers assistance to homeowners. She urged homeowners looking for insurance to take advantage of the department’s informational guides or to call the department’s toll-free number: 1-800-927-4357.

The department also offers the FAIR Plan for homeowners in high-risk areas not covered by insurance companies. Kincaid noted the coverage is limited to what a mortgage company would require for rebuilding the home; it does not include water, burglary or liability coverage.

With the confusion caused by insurers and the state powerless to intervene, homeowners need someone who clearly has their interests in mind when they have a legal dispute. Real estate attorney Daniel C. Carlton, based in Orange County, can discuss your options.

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Dan Carlton and his team are dedicated, down-to-earth, compassionate personal injury attorneys committed to helping victims of traffic accidents, personal injuries, dog bites and more. Serving Los Angeles and the entire Orange County area, including Anaheim, Tustin, Irvine, Garden Grove and Santa Ana, for over 40 years, we have handled thousands of cases.

Daniel C. Carlton