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California Protects Residents From Losing Fire Insurance Two Years in a Row

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The California Department of Insurance revealed a list that listed down 518 ZIP codes of homes within or near areas affected by wildfires this year and protects them from insurers dropping their insurance for the next year due to the fire threat.

In a news release, the department said that the list covered about 2.1 million policyholders or about 18% of California’s residential market. The protections also include homes in the Bay Area except San Francisco that were close to the Glass, Coyote, or Woodward fires, CZU, SCU, or LNU lightning complex fires.

Officials issued the list as the risk of insurers cutting their customers off for the next year increased due to wildfires threat. In 2019, insurance companies denied nearly one-third more homes of their policies than they did in 2018. Last month, the department announced that insurers denied to renew 203% more homeowners in 10 counties with high wildfire risks.

The released ZIP code list enforced SB824, which was effective since January 2019, and affects homes close to or next to the area of a reported wildfire in the region. The legislation blocks insurers from denying or canceling a renewal from a resident in the region for one year due to their proximity to a previous wildfire.

However, it does not protect homeowners from having their renewals canceled or denied if they have other issues such as non-payment of premiums or willful or negligent acts, the San Francisco Chronicle reported.

Most of the people affected by the policy drops have gone to the California FAIR Plan for assistance in the last two years. The plan is a state-run pool that gives only the most basic fire insurance and is used by owners who could not find any other insurer. The FAIR Plan saw a surge of 225% in enrollments last year.

Commissioner Ricardo Lara, who was a state senator at the time, proposed legislation that insurers are banned from dropping any of their customers for a year based solely on the fact that they live within the vicinity of a recent wildfire. If the customer’s home was destroyed, they would be protected for two years.

Lara used the law last December to protect 180 ZIP codes that state fire officials identified as being severely affected by 2019 wildfires. This year, on the other hand, would include more than twice the previous number.

The 2019 moratorium is set to expire on December 5, where over one million California residents are included. However, about 364,000 of these are also included in the new moratorium that officials announced on Thursday, CAP Radio reported.

Experts believe that climate change is the primary factor that has caused recent wildfires and increases the possibility of future incidents. The rising threat of fires forced insurers to take less risk by leaving fire-prone communities.

While Lara’s office declined requests for an interview, the official’s team said that the new policy allows millions of residents to relax. They added it stops insurers from declining or canceling renewals while officials work on providing additional options.

However, the moratorium does not permanently stop insurers from dropping policyholders amid fire threats. The legislation cannot be extended, which means that homeowners are again at risk of not being renewed when it expires.

Insurers have noted that if the government wanted them to continue providing their services, they should be allowed more freedom in charging higher premiums. Company officials said that it was the real threat of wildfires in the area.

Earlier this year, a bill that would have allowed insurers to charge higher rates based on predictions of future risks did not pass. Consumer groups argued that the legislation would be disadvantageous to homeowners, the New York Times reported.

Danielle Joyce Ong

Danielle is a local journalist with a passion for exploring stories related to crime and politics. When Danielle isn't busy writing or reading, she is usually exploring the great outdoors and all the hiking trails in the Bay.