Valley representatives warn of California’s harsh fire insurance reality

FRESNO, Calif. (KSEE/KGPE) – Last year, State Farm said it was cancelling coverage for 72,000 houses and apartments in California. Local representatives said millions of residents whose homes were destroyed could have a tough path forward.

The Palisades Fire burning in Los Angeles could become the most costly wildfire in history.

“What we’re going to see here within the next handful of weeks is a lot of people who are not going to be able to rebuild,” Fresno County Supervisor Nathan Magsig said. 

According to the most recent data from the California Department of Insurance, between 2020 and 2022, insurance companies declined to renew 2.8 million homeowner policies in the state.

“We need insurance reform here in California. But a lot of insurers, private insurers, don’t want to write policies here because they look at the risk,” Magsig said. 

The Little Hoover Commission released policy recommendations the commission believes can help the state address the crisis.

“If you spend the money to make your home fire-safe, and you do it based on certain rules that have been accepted by California and the insurance industry, that ought to help reduce your premium,” Little Hoover Commission Chair Pedro Nava said. 

Magsig said the damage from the fires in Los Angeles reminds him of the devastation from the Creek Fire.

“There were over 800 homes and structures that were lost across that roughly 380,000-acre footprint where that fire burned,” Magsig said. 

He said many of the residents affected were not protected, and there needs to be a change.

“My heart breaks for the fact that many of the people in Southern California are in similar situations where they either are underinsured or their insurance policies were dropped prior to this fire taking place. Lower the risk of these intense fires happening. And the only way you can do that is through fuels reduction.

“Once insurance companies see the state taking actions like that, they will begin to actually lower the cost and even willing to write more policies,” Magsig said.

Many canceled policy holders had to use a program set up by the state — but without taxpayer support — the California Fair Plan.

“Every single homeowner in California should be aware right now that there is a large potential that their home insurance is about to go up to make up for the losses that we have, because that’s required in the California Fair Plan,” District 8 Assemblyman David Tangipa said. 

According to analysts, the state could see insured losses as high as $50 billion.

“That is a massive, massive cliff that we are falling off that people really need to be aware of,” Tangipa said. 

Tangipa said the crisis was avoidable.

“Insurance markets, they know where the dangers are and they’re going to assess the risk. If we knew that they saw this area as a risk, it should have been our priority here in the legislature to make sure that those communities were protected,” Tangipa said. 

The overall message is to lower the risk of fires statewide to bring insurance companies back.