Published September 11, 2023
Homeowner Insurance in CA, what the hell?
I’m finding myself nervous to even write about wildfires, it’s like Voldemort from Harry Potter, he who shall not be named. I fear the dynamic one experiences when proclaiming their newly potty-trained toddler hasn’t had a single accident yet.
Of course, that’s when the kid pees their pants- shouldn’t have brought it up!
Leave well enough alone. But avoiding bringing up natural disasters doesn’t make it go away I guess, so here it goes;
In the past 5 years there were 10 million acres burned in the state of California. 39,000 homes were burned down. We all recall the various weird apocalyptic days when the sky was dark Orange and the ash coated our cars. This is the scary stuff that has led to our sucky homeowner insurance situation here in the golden state.
In 2017, California insurers paid out 15.4 billion dollars. In 2018 they paid 13.6 billion dollars. Before 2017, California insurers had never exceeded an annual loss of more than 5 billion dollars! That’s wild. So, during 2017 and 2018 insurance companies paid out almost 2$ for every 1$ premium.
So in 2019 more than 50 large California insurance companies were granted a 71% rate increase, that’s nothing to shake a stick at. Homeowners are still feeling that rate hike, and it doesn’t feel nice.
Also in 2019, 230,000 California homeowner insurance policies were not renewed.
There are laws on the books in California that essentially require insurance companies to justify their rate hikes for future years, based on average annual losses for the past 20 years. Wildfire losses have grown into an absolute behemoth compared to ten years ago. So this particular law asks insurers to take on a lot of risk. Insurers could find themselves unable to recoup losses with premiums, for a business it doesn’t make sense. It’s more risk than a lot of companies are prepared to assume.
A few years back CA Fairplan wasn’t a commonly used homeowner insurance company, but these days especially in more rural counties, it’s become a household name, as most often the only option. In 2019 after the worst crazy wildfire years, CA Fairplan saw an increase of 219%. While these numbers mostly relay the moment of this problems inception, it ain’t getting better.
Here are some problematic numbers from just this summer of this year;
- In August Safeco insurance dropped 950 policies from San Francisco and the East Bay.
- In July Farmers insurance put a cap on their California policies.
- In June Allstate announced it would sell no more policies in the state of California, right after State Farm, who pulled the plug on our state in May.
Just in case you’re in the process of shopping for insurance, rest assured, it’s not just you, this is hell for anyone buying new homeowner insurance in California right now.
There are still California Fairplan and Bamboo Insurance staying in the game and dolling out those policies. Your Monday Team agent is super down to help you tackle this thang, we got you. And the silver lining when things get this bad, is they are bound to improve at some point!
