California Senate Pushes to Stabilize the Homeowners Insurance Market
SACRAMENTO, Calif. — Senate recently held a hearing to determine the best options to help address skyrocketing premiums.
- Homeowners insurance prices in California are skyrocketing with the increased threat of wildfires.
- Those who live in homeowners associations, like condos, have stated their policies are being dropped entirely, and the new options are significantly higher.
- Lawmakers tried to make sense of it all at a recent Senate hearing. A nearly impossible task, as lawmakers all expressed in the meeting that this is a challenging topic with no perfect solution.
Lisa Meyer lives in San Diego County, and conferenced into the hearing. She owns a townhome in an HOA with 186 others.
“During our HOAs last insurance renewal we were notified that we would not be renewed due to proximity to high fire risk areas,” Meyer said. “Our community is not directly located in a fire risk area per county or city fire maps.”
The policy they were kicked off of was $54,000 a year. Their new one?
“An annual premium of $293,000,” Meyer said. “This resulted in an emergency assessment to each unit owner to cover the cost of that new premium amount.”
Janet Hayes lives in a planned community in Anaheim Hills.
“In 2020, Horizons paid $39,000 for property and fire insurance,” Hayes said. “This year, we are going to pay out $417,000 plus interest.”
That’s a 970% increase.
So, what happens when someone is dropped and they can’t find insurance?
They can temporarily use the state’s Fair Plan, a non-profit insurance plan, which is meant to be the insurance of last resort. The plans they offer however, are not large enough to cover HOAs
Senator Pro Tem Toni Atkins sent a letter to the California Department of Insurance asking them to help by ordering the Fair Plan to increase its capacity so that HOAs can apply.
“We will collapse in those areas,” President of the Fair Plan Victoria Roach said.
Roach told lawmakers Wednesday that a move like that would not work because they don’t have the funds to cover all the damage to HOAs if there were to be a fire. They would have to fall back on regular insurance companies to help cover the costs, which they say would increase premiums for all Californians.
“We’re at a breaking point,” Roach said. “The good news is, we can’t break because the industry is there to catch us. The bad news is, the industry is there to catch us, and that means that every policyholder in the state of California is going to have to pick up some of that cost.”
The California Department of Insurance said they are looking into the expansion.
“That’s something that we are working on,” Deputy Communications Manager Michael Soller said. “We’re looking at it with a fair, fine, we want to make sure we do this right the first time, and so again, we’ll have more to come on that but that we’re absolutely looking at that right now.”
The insurance commissioner did put on new regulations though that begin in April that will require insurance companies to provide discounts for people who take necessary steps to reduce their fire risks. People will also be able to appeal the fire risk score their insurance company gives them with the state.
Article Source: CBS8
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