SAN DIEGO — California's insurance reforms, intended to bring relief to homeowners struggling with wildfire coverage, have instead resulted in higher rates and an increase in state homeowners without fire insurance. More than 10% of California homeowners don't have fire insurance, according to a recent report by LendingTree.
The crisis deepened two years ago when State Farm, Allstate, and Farmers Insurance stopped or limited writing new policies in California, exacerbating an already difficult situation for residents seeking coverage.
The reforms were designed to accomplish two goals: bring more insurance companies back to the California market; and help homeowners get off the FAIR Plan, which serves as insurance of last resort for those who have had their fire policies canceled.
"A lot of homeowners are just frustrated with the insurance marketplace, and they're really terrified to lose their insurance," said Emily Rogan, senior program officer at United Policyholders, a nonprofit advocacy organization.
However, the strategy has not yet produced the intended results. "The strategy was that with more competition, we'll see rates go down, and we haven't seen that yet," said Rogan.
Instead, the number of homeowners forced into the FAIR Plan continues to increase, according to figures released in September.
"I feel like the insurance reforms are a long game, and that really hurts for the homeowner, for the insurance consumer, because they're not seeing the relief that was promised," said Rogan.
For homeowners seeking coverage, some options remain available. Farmers Insurance has resumed writing limited homeowners policies, while State Farm has not resumed coverage. Allstate has promised to resume writing policies in the future.
"If you don't want to do the research yourself, you can find an independent insurance broker who can write insurance from many different insurance companies, and they might be able to help you compare," said Rogan.
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