Navigating Wildfire Risk Amid Insurance Uncertainty

Photo courtesy Anita Nardine
Flames loom ominously behind a ridge along Ocean View Boulevard during the destructive Station Fire in 2009.

Shirley Chung has lived in the Angeles Crest region of La Cañada Flintridge for more than 20 years and never had a problem obtaining homeowner insurance, until she was suddenly dropped from her plan last year amid the perceived fire risk in the area.
Chung is not alone: A handful of area residents this past year have expressed frustration and fear after receiving a “non-renewal” from their longtime insurers.
“For 23 years we had insurance with no problem, and then they dropped us,” Chung said Saturday at an event titled “La Cañada Flintridge: The Next Paradise?” at the LCF Library. “I was so upset with them.”
After some initial shock and anxiety, she’s been able to find a new insurance company and is “hoping they’ll stay with us. Otherwise, I’ll have to look again.”
The state Department of Forestry and Fire Protection has listed LCF as a “very high fire hazard severity zone” on its website. An analysis by news outlets and companies including USA Today, McClatchy, Media News and the Associated Press in April 2019 concluded that the 15 places in California most likely to burn included LCF and Rancho Palos Verdes. The analysis began in late 2018 after the Camp Fire in Northern California.
Chung joined about 20 others at last week’s LCF Library event, whose title referred to Paradise, California, which was ravaged in the 2018 Camp Fire. Its purpose was to share survival tips and stories in the aftermath of that Butte County event, considered the deadliest wildfire in California history. It began on Nov. 8, killed 85 people, burned more than 150,000 acres and was finally contained on Nov. 25, with investigators concluding that a faulty electric transmission line started the blaze.
Jeanne O’Donnell, senior emergency program manager for Los Angeles County’s Office of Emergency Management, displayed dramatic images of the Camp Fire and its aftermath.
She asked attendees to sign up for the emergency alert system at alert.lacounty.gov and to have “at least three to five different ways or plans” to get information before and during an event. That included selecting three neighbors for a communications plan, leaving home when told to evacuate and not returning until told to do so.
Librarian Elaine Braddock, a co-presenter of the event, noted that LCF had the same high-fire-hazard designation as Paradise.
As fire season kicks into gear, fire insurance for LCF homeowners has become a timely topic.
On Dec. 5, state Insurance Commissioner Ricardo Lara issued a one-year moratorium that forbids insurance companies to “non-renew” the policies of residents in declared wildfire disaster areas, retroactive to October. He also asked companies to voluntarily stop all non-renewals related to wildfire risk statewide until Dec. 5, 2020.
Though the moratorium does not apply to LCF residents, the optional halt on refusing to renew fire insurance coverage does.
“We’re making the case this is the right thing to do,” Michael Soller, deputy commissioner for communications at the California Department of Insurance, said last week. He said he hadn’t heard any immediate pushback from insurers last year.
Soller added his office is “continuing to work on” making insurance more affordable, including modernizing the California Fair Access to Insurance Requirements Plan by offering a more comprehensive policy next year.
The FAIR Plan is an insurance pool that was created in July 1968 after the 1960s’ brush fires and riots, according to its website. It was established to assure the availability of basic property insurance to people who have been unable to obtain insurance in the voluntary insurance market.
There is no public funding or taxpayer money involved, according to the site, and the program is stronger than any single insurer because it is backed by the capital and surplus of all insurance companies writing property insurance in the state.
Soller said Lara wanted to modernize the FAIR plan no later than June 1.
Before the moratorium announcement, local homeowners had been getting their fire insurance non-renewed by a lot of carriers, said Bill Stewart of Stewart Insurance Agency in LCF. He represents Farmers Insurance Group.
“We’re also seeing rates go up … we’ve had two or three good fires every year,” Stewart said.
The Station Fire, which started north of LCF, burned 161,000 acres and killed two firefighters, likely made it more difficult for residents to get fire insurance, Stewart said. The fire began on Aug. 26, 2009, in the Angeles National Forest along the Angeles Crest Highway and was declared fully contained on Oct. 16 that year.
“I think that was probably the catalyst for the change around here,” Stewart said. “After the Station Fire, policies were amended in some cases. I definitely think it was a start.”
More recently, Stewart said, the 2019 Kincade Fire in Sonoma County has affected homeowner rates because of its unpredictable nature. “A lot of companies are scared to write home policies … it’s definitely getting tighter.”
Stewart said it was difficult to give an approximate number for the average price of homeowner insurance. He said multiple factors go into the price, including square footage, the type of construction, proximity to brush, multi-policy discounts, claims history, safety discounts, the number of a structure’s stories and more.
“If you were to hold my feet to the fire until I gave you a premium range, I would say between $1,500 and $2,500 a year,” Stewart said. “I have homeowners who spend $10,000 on their home insurance and others who spend $800.”
Stewart said Farmers was “fairly liberal” in its brush guidelines for homes compared with other carriers but also has a home insurance plan excluding fire coverage. When that type of situation occurs, it can help homeowners obtain coverage under the FAIR Plan, he said.
Stewart said if Farmers declines fire coverage for a client, he makes sure to find a company or program like FAIR to provide it.
Anneliese Jivan, president of the California FAIR Plan Association, said the organization was in the process of increasing its coverage limit from $1.5 million to $3 million and working to implement the change in spring 2020. In 2019, there were 363 people on the FAIR Plan in LCF, Jivan said.
FAIR Plan coverage, she said, was meant as an interim solution for most consumers and essentially operates as a safety net for homeowners.
“While the FAIR Plan will sell this insurance to anyone and provide that coverage for as long as necessary, the FAIR Plan’s goal is to assist homeowners in transitioning to coverage provided by the voluntary market,” Jivan said.
Deputy Insurance Commissioner Byron Tucker said that “across most of California, by and large, insurance rates are affordable and insurers are competing for your business.”
But he added: “If you get a non-renewal notice there are steps you can take. First, I’d recommend … ask the insurer if there are any specific actions as a homeowner or renter you can take to mitigate risk and retain coverage.”
He also referred consumers to the insurance department’s website, which lists companies that write insurance. People can also call the department’s (800) 927-4357 help line.
Sevag Sarkissian, a media representative for State Farm in California, Nevada, Hawaii and Alaska, said due to proprietary considerations he could not provide details on underwriting guidelines used to write insurance policies in California.
“While wildfire is a significant risk, it is not the only factor considered in our underwriting of homes in California,” Sarkissian said in a statement. “In California, State Farm has not non-renewed customers’ existing homeowners insurance policies solely based on wildfire risk.”
He said numerous factors are considering in underwriting a homeowners insurance policy such as the location of the property relative to natural hazards, the condition of the property and the customer’s past claim activity and history.
Janet Ruiz, a director of strategic communications for the Insurance Information Institute, said her organization has been talking about the issue of non-renewals for the past couple of years.
She said the way insurance works is that separate companies take on part of the risk — like wildfires or hurricanes — in a particular area.
“In a community, say La Cañada Flintridge, there may be some companies who had more risk than they would have liked or loved,” Ruiz said. “So what normally happens is some companies do not write any new insurance policies or say they have too much so they non-renew some. Other companies still have what we call the capacity to raise rates.”
Consequently, Ruiz said, people now have to shop around and compare insurance, and often times people don’t like doing that or simply haven’t spent much time trying to look at different policies.
“With increasing wildfire risk and the amount of loss we’ve seen over the last few years, it’s something they do have to spend more time thinking about and preparing for,” Ruiz said.
She noted that in general people are seeing their insurance become more expensive because of the wildfire risks as well as higher building costs. But California has one of the lowest costs for fire insurance in the nation, Ruiz added.
For instance, she said, Boulder, Colorado, charged 45% more for insurance than California last year because of their wildfire plan and that the state Department of Insurance has kept rates “artificially low” for many years.
“We kind of got a good deal for all these years but we have to be able to pay the claim after a wildfire,” Ruiz said. “People paying $1,000 or $1,200 a year for homeowners insurance is very low.”

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