Aerial view of the Inner Sunset and Outer Sunset neighborhoods of San Francisco, California, seen from Parnassus Heights.
Smith Collection/Gado/Getty Images
Several insurance companies have stopped accepting California home and business owners amid growing wildfire concerns.
The number of fierce wildfires in the state has increased in recent years, and insurance companies are worried about the risk. In 2022, there were 5,006 wildfires that burned through 117,880 acres, according to Cal Fire data. So far this year, the state has experienced 4,337 wildfires, which have burned 114,562 acres.
Those who live in high-risk areas are encouraged to purchase home insurance, such as people in Florida or Texas who live in hurricane-prone areas. In California, more people are moving into areas that are at risk for wildfires, and it’s costing insurance companies too much money to repair and replace houses while battling inflation, Janet Ruiz, a spokesperson for the Insurance Information Institute, said in a statement to SFGATE.
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Florida and Louisiana have experienced a similar issue, with insurance companies canceling renewals or ceasing new applications, because of the disaster risk, Ruiz said.
The company said in a news release that the decision won’t affect current insurance holders but was made because of “increases in construction costs outpacing inflation, rapidly growing catastrophe exposure, and a challenging reinsurance market.”
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For some though, insurance companies are raising premiums as they operate on “risk-based pricing,” Ruiz said. Those in wildfire areas will have to pay more, depending on their policy. Ruiz said the insurance industry remains “financially strong,” because of the “sound alignment of insurance pricing with the costs of risk.”
Ruiz said homeowners should contact a local insurance or agent to find out which companies are offering policies to those in wildfire-prone areas. Those in areas susceptible to wildfires are required to have insurance prior to finalizing a deal with real estate agents, she said.
Homeowners may have to turn to the California Fair Plan, a company that provides basic fire coverage, if they aren’t able to find an insurer that will cover fire expenses.