SAN DIEGO — Homeowners across San Diego County are facing increasing insurance rates due to wildfire risk.
While insurance agencies continue to bail out of California, the companies will soon be required to offer fire mitigation discounts on homeowners’ policies.
Bryon Yates lives in a master-planned housing complex in Campo with more than two hundred homes.
“As you can see my roof here is fire resistant. I would say, in my opinion, fireproof,” said Yates.
While Campo may be considered a high-risk wildfire zone, Yates’ neighborhood looks more like a suburban community.
“I even have a fire hydrant up on my property,” said Yates.
The single father of four said he had Farmers homeowners’ insurance for the past 12 years. But when his policy came up for renewal last month, he said, Farmers wanted to raise his annual premium from about $1,000 to $6,000 due to wildfire risk; a 600% increase.
“There was no warning on the renewal. They basically just stuck it to you. Then you're left with the decision whether to pay it or leave,” said Yates. “I couldn't afford it. Not on my salary. Not for what I make. There's no way.”
Yates was forced to switch to the California FAIR Plan, a state-run and insurance-industry-funded policy of last resort.
“With that, I'm still paying $600 more. And it's with basic coverage. I mean, bare minimum with a $20,000 deductible, whereas before, I had like a $500 deductible,” said Yates.
Yates said his agent told him insurance companies can charge more because there's less competition, now that Allstate and State Farm have stopped writing new homeowners policies in California.
Farmers Insurance sent CBS 8 a statement saying, “rates are designed to reflect risk level” and that, “homeowners insurance rates are determined using a number of different variables, including historical loss data, loss trends, age and construction-type of structures.”
An industry spokesperson told CBS 8, it’s all about losses from recent wildfires.
“The insurance industry has lost 20 years worth of underwriting profit in the last six to eight years,” said Janet Ruiz with the industry-funded Insurance Information Institute.
She said insurance companies are facing wildfire risk, climate change, increased construction costs and inflation, resulting in loss of profits.
“We have to make sure that we collect enough premium to be able to pay our losses. This is a financial business that has to stay solvent,” Ruiz said.
While insurance premiums continue to go up, there is a new law in California that can help people get discounts on homeowners’ insurance when they harden their homes against wildfires.
“And that just makes sense, right? If you put money into protecting your home or your property against a wildfire, the insurance company should give you a discount commensurate with that,” said Harvey Rosenfield, founder of the nonprofit, Consumer Watchdog.
Rosenfield said the upcoming Fire Mitigation Discounts are a good thing. But there is a loophole.
“The loophole allows an insurance company, if they don't want to give you a discount, it allows the insurance company to non-renew you instead,” said Rosenfield.
The discounts still need state approval – which may come by the end of the year -- and they will be different for each insurance company.
In April, for example, State Farm proposed giving homeowners a two percent discount for installing a class-A fire-rated roof, a one percent discount for clearing defensible space, and a two percent discount for homes in a CalFire designated Firewise USA community.
The new law would allow homeowners to request the wildfire risk score for their home from their insurance agent.
“The insurance companies are supposed to tell you what the score is, and how they arrived at the score,” said Rosenfield. “So, that people will start to get their scores and understand how much they're going to save by doing whatever they can do by protecting their property.”
When your insurance policy comes up for renewal, the insurance company is required to send you your home's wildfire risk score.
The Insurance Information Institute also offers a free home risk assessment by entering your home address online.
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