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Wildfire insurance coverage in California might be harder to get

On Behalf of | Jul 17, 2023 | Insurance Disputes

Wildfires are an increasing risk that threaten the homes of residents of California. While a standard homeowner’s insurance policy will cover certain damages, they generally do not cover damage caused by wildfires, prompting the need to obtain supplemental wildfire coverage. Unfortunately, two major insurers have stated they will no longer provide coverage for damages caused by wildfires in California.

Two insurers will no longer provide wildfire insurance coverage

Two major insurance companies, State Farm and Allstate, have recently announced they will no longer offer new homeowner’s insurance policies in California, citing the threat of wildfires that destroy homes, increasing the costs these companies incur.

These changes will certainly affect new homeowners in California. Some new homeowners may find it is more challenging to purchase property if they cannot obtain insurance to cover damage to said property. Some new homeowners might choose to purchase property without any homeowner’s insurance, increasing the risk that they will be entirely responsible for any damage to their new home.

Some organizations are challenging the legality of these insurers’ withdrawal from the state. They argue the insurers did not seek the approval of the California insurance commissioner to do so, as required by the law.

Wildfire insurance coverage in California

Still, wildfire coverage has been controversial for a while, especially given the increasing number of wildfires in California. Most standard homeowner’s insurance policies do not cover certain natural disasters, including damage caused by wildfires. Residents are encouraged to purchase separate wildfire coverage in the event their property is destroyed by wildfires, the costs of which can vary based on where a California resident resides.

Some California residents can apply for California’s Fair Access to Insurance Requirements (FAIR) Plan. This is a state program that offers insurance coverage for those who live in areas of the state that are especially at risk for wildfires.

However, to qualify for the program, residents must be unable to obtain insurance on the commercial market. Moreover, there are limits to what types of damage a FAIR Plan will cover.

That being said, it is good for California residents to ensure they are able to obtain wildfire insurance coverage. Many factors are leading to an increase in the number of wildfires in the state. It is important to be prepared for the possibility that one of these fires could occur near your home.