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California Homeowners Face Higher Insurance Costs After Fires

Ken555

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I was on the phone with my agent today. My rates went up 20% this year, which has been the lowest annual increase in five years. My premium has increased 285% in five year. And I’m not in a prime fire area.


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CalGalTraveler

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I was talking with an agent today and they said many homeowners in the Truckee/Tahoe area are being dropped from coverage and are scrambling to find new policies because of the fire risk.

Our policy almost doubled this year. The agent said some people in the Tahoe basin and Truckee area have seen insurance jump 3 - 5x with some up to $17,000 a year for insurance. That's more than property taxes. On top of it Calif offers a Fair plan but it only covers up to $1.5m all in.

So all those lake front Tahoe homes worth millions will have to be self insured. I presume that won't be a problem for the rich, however there are many modest multi-generational lakefront homes where the families will be forced to sell because they cannot afford insurance or cannot insure.
 

T_R_Oglodyte

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Many people in the western US choose to live in sylvan and woodsy environs. To me it's similar to choosing to live on a barrier island on the East Coast.

People are certainly welcome to make that choice, but then having made that choice they should live with the consequences and costs associated with that choice. And the price to insure against those risks comes in the form of insurance premiums.

Maybe I'm being harsh or insensitive, but I don't believe it's good public policy to subsidize people choosing to live in areas that are subject to known and predictable natural disasters.

For the first couple of years after we were married we lived in the San Bernardino Mountains, near Lake Arrowhead. One of the factors that caused us to leave was the fire risk.
 

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I was talking with an agent today and they said many homeowners in the Truckee/Tahoe area are being dropped from coverage and are scrambling to find new policies because of the fire risk.

Our policy almost doubled this year. The agent said some people in the Tahoe basin and Truckee area have seen insurance jump 3 - 5x with some up to $17,000 a year for insurance. That's more than property taxes. On top of it Calif offers a Fair plan but it only covers up to $1.5m all in.

So all those lake front Tahoe homes worth millions will have to be self insured. I presume that won't be a problem for the rich, however there are many modest multi-generational lakefront homes where the families will be forced to sell because they cannot afford insurance or cannot insure.

Sigh...typical insurance. They offer an umbrella when it’s not raining but as soon as there are clouds in the sky, the umbrella is pulled.

A friend of mine was healthy until a year ago. He sadly got cancer. What happened to his health insurance midstream? It got pulled. Too high a risk after being with the same company for many years. The result? Bankruptcy and now is cared for by the State.

Sad all around.


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Ken555

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Many people in the western US choose to live in sylvan and woodsy environs. To me it's similar to choosing to live on a barrier island on the East Coast.

People are certainly welcome to make that choice, but then having made that choice they should live with the consequences and costs associated with that choice. And the price to insure against those risks comes in the form of insurance premiums.

Maybe I'm being harsh or insensitive, but I don't believe it's good public policy to subsidize people choosing to live in areas that are subject to known and predictable natural disasters.

For the first couple of years after we were married we lived in the San Bernardino Mountains, near Lake Arrowhead. One of the factors that caused us to leave was the fire risk.

I live in a major metro area, not in fire zone, and my rates have increased 285% in five years. How does that fit in with your reasoning?


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T_R_Oglodyte

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I live in a major metro area, not in fire zone, and my rates have increased 285% in five years. How does that fit in with your reasoning?
Not knowing specifics I can't say. But if there is a competitive insurance market and all insurers are increasing their premiums, then it's likely that event have transpired that have caused insurers to reassess risks.

I understand the situation. My professional and general liability insurance premiums for my business have tripled over the last five years - partly because of some adverse court decisions increasing insurer liability, as well as a change in my business portfoli0 (the amount of work I do for public agencies has increased, and working for public agencies is much higher risk, as compared with doing the same work for private companies).

That's the price of doing business. Meanwhile I search for other insurers that assess my work differently, and last year I switched insurers after having been a loyal customer for my previous insurer for more than 20 years.
 

Ken555

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Not knowing specifics I can't say. But if there is a competitive insurance market and all insurers are increasing their premiums, then it's likely that event have transpired that have caused insurers to reassess risks.

I understand the situation. My professional and general liability insurance premiums for my business have tripled over the last five years - partly because of some adverse court decisions increasing insurer liability, as well as a change in my business portfoli0 (the amount of work I do for public agencies has increased, and working for public agencies is much higher risk, as compared with doing the same work for private companies).

That's the price of doing business. Meanwhile I search for other insurers that assess my work differently, and last year I switched insurers after having been a loyal customer for my previous insurer for more than 20 years.

Thank you for confirming that your earlier characterization of the rate increases was incorrect.


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klpca

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Many people in the western US choose to live in sylvan and woodsy environs. To me it's similar to choosing to live on a barrier island on the East Coast.

People are certainly welcome to make that choice, but then having made that choice they should live with the consequences and costs associated with that choice. And the price to insure against those risks comes in the form of insurance premiums.

Maybe I'm being harsh or insensitive, but I don't believe it's good public policy to subsidize people choosing to live in areas that are subject to known and predictable natural disasters.

For the first couple of years after we were married we lived in the San Bernardino Mountains, near Lake Arrowhead. One of the factors that caused us to leave was the fire risk.
You really can't compare a home in the mountains to suburbia in the city. In 2003, the fire that we had here crossed a 12 lane freeway. In 2007 a different fire also crossed the freeway and burned homes 35 miles from the place where the fire started. That neighborhood had been there for 40 years. It's not like we are building in the back country. The fires come to us during Santa Ana's. Between the prolonged drought conditions, our normal Santa Ana's, and human errors, fire risk has increased and the insurers don't want to cover it at the old rates any longer. They have had some tremendous losses in the past 20 years so I certainly understand it, although I don't appreciate the premium increases.

Interesting info to our most memorable local fires:
Link to photo of the fire crossing the northbound 15 at MCAS Miramar, 2003 Cedar Fire. https://commons.wikimedia.org/wiki/File:Cedar_Fire_crosses_Interstate_15.jpg
Info on the Cedar fire: https://en.wikipedia.org/wiki/Cedar_Fire_(2003)
FYI - started in the backcountry by a lost hunter from LA. The fire spread 30 miles from the east to the west - overnight. It want from a sparsely populated area to the suburbs in hours. It closed the San Diego airport.

2007 Witch fire - started by a downed power line: https://en.wikipedia.org/wiki/Witch_Fire We had 90mph winds. The fire burned homes 35 miles from the point of origin after crossing a 12 lane freeway.

I don't personally feel that these qualify as predictable natural disasters, more like predictable human caused disasters. And living in an actual city, surrounded by 12 lane freeways hardly makes me feel like I am living in a sylvan and woodsy environ. SDGE has spent the last few years working to improve fire safety as it was their power lines that caused the Witch Fire. They now shut off power to customers when the Santa Ana's get going. I am sure that PG&E will be doing the same since they have their own set of problems with fire related issues.
 

pedro47

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$17,000 dollars for a homeowners policy. Wow! I am going to stop complaining about my homeowners insurance policy in Virginia.
I cannot imagine paying double figures for a policy.
 

T_R_Oglodyte

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If I were in the fire insurance business, at least in CA, seeing the wildfire a couple of years ago jump
You really can't compare a home in the mountains to suburbia in the city. In 2003, the fire that we had here crossed a 12 lane freeway. In 2007 a different fire also crossed the freeway and burned homes 35 miles from the place where the fire started. That neighborhood had been there for 40 years. It's not like we are building in the back country. The fires come to us during Santa Ana's. Between the prolonged drought conditions, our normal Santa Ana's, and human errors, fire risk has increased and the insurers don't want to cover it at the old rates any longer. They have had some tremendous losses in the past 20 years so I certainly understand it, although I don't appreciate the premium increases.

I don't personally feel that these qualify as predictable natural disasters, more like predictable human caused disasters. And living in an actual city, surrounded by 12 lane freeways hardly makes me feel like I am living in a sylvan and woodsy environ. SDGE has spent the last few years working to improve fire safety as it was their power lines that caused the Witch Fire. They now shut off power to customers when the Santa Ana's get going. I am sure that PG&E will be doing the same since they have their own set of problems with fire related issues.
I agree totally. Seeing the wine country fire several years ago move into long-established subdivisions in Santa Rosa was scary and eye-opening. That's on a par with the So Cal fires that you mentioned. I was also around in the mid-1980's when the Oakland Hills fire came descended down the hillside and into the City. Eucalyptus burns very hot.

Couple all of that with climate change, and if I were in the fire underwriting business in the western US, I would certainly be questioning the assumptions in my old risk models. And not just fire, I would wonder if all forms of weather-related calamity are properly priced.
 

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Glad I do not have insurance on my properties.

Owners should pay the full rate if they want insurance. Planning should be better so people to not build on costal islands, sides of mountains, flood zones etc. But the government lets them. Buyer beware.
 

rickandcindy23

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Wow. 285% increase seems excessive. Our home insurance went up to $1,800/yr, and I called around and got a better deal with American Family, but it's still $1,400/yr.
 

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Home repair costs are going up also. I just had a broken spring on a rollup garage door replaced.

The repairman said there is a new law that garage door openers must have battery backup in CA, adding about $150 to the cost for battery and DC motor.

Law was due to people getting trapped in garages when power went out, I guess the lanyard to release the slide was not good enough. I know people that remove the lanyard because thieves use it to get into garages, break the window and reach in.


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Fredflintstone

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Home repair costs are going up also. I just had a broken spring on a rollup garage door replaced.

The repairman said there is a new law that garage door openers must have battery backup in CA, adding about $150 to the cost for battery and DC motor.

Law was due to people getting trapped in garages when power went out, I guess the lanyard to release the slide was not good enough. I know people that remove the lanyard because thieves use it to get into garages, break the window and reach in.


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Everything is going up. However, wages aren’t keeping up unless your a very highly skilled worker or in Senior Management in a successful company or have a growing business.




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Ken555

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You really can't compare a home in the mountains to suburbia in the city. In 2003, the fire that we had here crossed a 12 lane freeway. In 2007 a different fire also crossed the freeway and burned homes 35 miles from the place where the fire started. That neighborhood had been there for 40 years. It's not like we are building in the back country. The fires come to us during Santa Ana's. Between the prolonged drought conditions, our normal Santa Ana's, and human errors, fire risk has increased and the insurers don't want to cover it at the old rates any longer. They have had some tremendous losses in the past 20 years so I certainly understand it, although I don't appreciate the premium increases.

Interesting info to our most memorable local fires:
Link to photo of the fire crossing the northbound 15 at MCAS Miramar, 2003 Cedar Fire. https://commons.wikimedia.org/wiki/File:Cedar_Fire_crosses_Interstate_15.jpg
Info on the Cedar fire: https://en.wikipedia.org/wiki/Cedar_Fire_(2003)
FYI - started in the backcountry by a lost hunter from LA. The fire spread 30 miles from the east to the west - overnight. It want from a sparsely populated area to the suburbs in hours. It closed the San Diego airport.

2007 Witch fire - started by a downed power line: https://en.wikipedia.org/wiki/Witch_Fire We had 90mph winds. The fire burned homes 35 miles from the point of origin after crossing a 12 lane freeway.

I don't personally feel that these qualify as predictable natural disasters, more like predictable human caused disasters. And living in an actual city, surrounded by 12 lane freeways hardly makes me feel like I am living in a sylvan and woodsy environ. SDGE has spent the last few years working to improve fire safety as it was their power lines that caused the Witch Fire. They now shut off power to customers when the Santa Ana's get going. I am sure that PG&E will be doing the same since they have their own set of problems with fire related issues.

Additionally, last November’s fires were larger, faster, and more devastating than many expected. Just look at the timeline of the Wolsey fire:

https://en.m.wikipedia.org/wiki/Woolsey_Fire

I have heard second hand from firefighters who were among the first to respond stories that illustrate the speed of this particular fire. I was told of an engine which arrived at a home closet to the fire, they reviewed the area and saw the fire hundreds of feet away (if not more), then went to get their equipment, and by the time they returned to the backyard of the home minutes later the fire was almost on top of them. No one was prepared for this fire to cross the 101 (a major freeway) the first night...I don’t believe any fire had ever moved so fast in this area previously.

I understand and appreciate all Californians will have rate increases due to fires, including those not near us. Still, 285% over five years seems excessive.

Since I posted yesterday I received a few other quotes and ALL are significantly higher than my renewal quote. I’m likely going to increase my deductible in order to have a lower premium, as that seems to be the best option available (yet that premium will still be over 200% higher than it was five years ago).


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klpca

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We just got a letter from our fire insurance company and they are going to cancel us effective July 1. We are afraid we will not be able to find anyone to insure us.

Mike & Edie
That's my biggest fear.
 

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Home repair costs are going up also. I just had a broken spring on a rollup garage door replaced.

The repairman said there is a new law that garage door openers must have battery backup in CA, adding about $150 to the cost for battery and DC motor.

Law was due to people getting trapped in garages when power went out, I guess the lanyard to release the slide was not good enough. I know people that remove the lanyard because thieves use it to get into garages, break the window and reach in.


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I had not heard about this change in the codes. At first glance it seems excessive, but reading more it seems they are attributing elderly people being killed in some of the recent fires due to the inability to open the garage.

https://www.sacbee.com/news/politics-government/capitol-alert/article218811560.html

I wouldn't have any trouble opening the door with the manual release, but not sure my wife would get all the steps right... But of course we solved that issue by keeping so much junk in the garage, the cars are in the driveway...
 

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Between the prolonged drought conditions, our normal Santa Ana's, and human errors, fire risk has increased and the insurers don't want to cover it at the old rates any longer.
I think what was normal for 40+ years, and what the "new normal" will be in terms of climate change are two different beasts. I think these changes in insurance coverage are a vanguard of the "new normal."
 

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Home repair costs are going up also. I just had a broken spring on a rollup garage door replaced.

The repairman said there is a new law that garage door openers must have battery backup in CA, adding about $150 to the cost for battery and DC motor.

Law was due to people getting trapped in garages when power went out, I guess the lanyard to release the slide was not good enough. I know people that remove the lanyard because thieves use it to get into garages, break the window and reach in.


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Thanks for the heads up on this. We'll want to get battery backup added before putting house up for sale in two years. Lord knows toilet specs have probably changed AGAIN and we'll likely have to do that too! We've moved four times in the last 20 years and there is always something that was to code when we moved in and not when we moved out.
 

PigsDad

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Everything is going up. However, wages aren’t keeping up unless your a very highly skilled worker or in Senior Management in a successful company or have a growing business.
I'm not buying this. The real issue is that people now demand more, larger, and more luxurious things and services. Think about how many things we view as necessities today that were pure luxury items 20, 40, 60 years ago. Everyone has to have their own phone. Multiple cars per family. Big vacations. The list goes on and on.

But the big one is housing. Take a look at how the average size of a new house in has grown since the 50's:

image_preview


From less than 1000 sq. ft. to 2500. AND the average family size has decreased by over 30% during that same time!

So please, don't give me the line that wages have not kept up. That's just a smoke screen to the real issue of the rampant increase of consumerism.

Kurt
 

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I'm not buying this. The real issue is that people now demand more, larger, and more luxurious things and services. Think about how many things we view as necessities today that were pure luxury items 20, 40, 60 years ago. Everyone has to have their own phone. Multiple cars per family. Big vacations. The list goes on and on.

But the big one is housing. Take a look at how the average size of a new house in has grown since the 50's:

image_preview


From less than 1000 sq. ft. to 2500. AND the average family size has decreased by over 30% during that same time!

So please, don't give me the line that wages have not kept up. That's just a smoke screen to the real issue of the rampant increase of consumerism.

Kurt

Some points well taken. Yes, home sq ft have increased.

Here is the median wages in the US sourced by Wikipedia:

Year Wage Index Year Wage Index Year WageIndex
1951 $2,799.16 1952 $2,973.32 1953 $3,139.44
1954 $3,155.64 1955 $3,301.44 1956 $3,532.36
1957 $3,641.72 1958 $3,673.80 1959 $3,855.80
1960 $4,007.12 1961 $4,086.76 1962 $4,291.40
1963 $4,396.64 1964 $4,576.32 1965 $4,658.72
1966 $4,938.36 1967 $5,213.44 1968 $5,571.76
1969 $5,893.76 1970 $6,186.24 1971 $6,497.08
1972 $7,133.80 1973 $7,580.16 1974 $8,030.76
1975 $8,630.92 1976 $9,226.48 1977 $9,779.44
1978 $10,556.03 1979 $11,479.46 1980 $12,513.46
1981 $13,773.10 1982 $14,531.34 1983 $15,239.24
1984 $16,135.07 1985 $16,822.51 1986 $17,321.82
1987 $18,426.51 1988 $19,334.04 1989 $20,099.55
1990 $21,027.98 1991 $21,811.60 1992 $22,935.42
1993 $23,132.67 1994 $23,753.53 1995 $24,705.66
1996 $25,913.90 1997 $27,426.00 1998 $28,861.44
1999 $30,469.84 2000 $32,154.82 2001 $32,921.92
2002 $33,252.09 2003 $34,064.95 2004 $35,648.55
2005 $36,952.94 2006 $38,651.41 2007 $40,405.48
2008 $41,334.97 2009 $40,711.61 2010 $41,673.83
2011 $42,979.61 2012 $44,321.67 2013 $44,888.16
2014 $46,481.52 2015 $48,098.63 2016 $48,642.15
2017 $50,321.89
F

And here are the average home prices in California:

deb5394029873b330ea4ade0d27db595.gif


So, house prices, (on average) went from 5 x wages to almost 10 x wages from 1970 to now.

In Vancouver, Canada an average 1000 sq foot home went for 87,000 in 1988. Today that SAME home sold for 1.8 million dollars. Average wages in Vancouver in 1988 were 21 k and today are 54 k. So, a BASIC home went up 19 x and wages went up 2 x.

I can cite example after example and these quotes are on basic 1000 sq foot homes.


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CalGalTraveler

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Home repair costs are going up also. I just had a broken spring on a rollup garage door replaced.

The repairman said there is a new law that garage door openers must have battery backup in CA, adding about $150 to the cost for battery and DC motor.

Law was due to people getting trapped in garages when power went out, I guess the lanyard to release the slide was not good enough. I know people that remove the lanyard because thieves use it to get into garages, break the window and reach in.


Sent from my iPad using Tapatalk Pro


I was told that building costs per sq foot are skyrocketing due to skilled labor shortages and tariffs now being imposed on building materials from China. Plus more regulation. She told me that it costs upward of $400/sq foot to rebuild in the Truckee/Tahoe area. So, it will cost more to rebuild than many homes are worth.

It's a double-whammy because many long-time homeowners are apparently under-insured. The insurance broker told me that many policies are now going from full coverage if your coverage is within 80% of the actual cost to rebuild, to people being dropped and their only alternative is to go with non-California regulated plans that require 100% coverage which means that if your estimate of the property is too low, they will only give you the coverage percentage of the total cost to rebuild. If you don't cough up the money to augment and rebuild as before, then they will only give you the depreciated value of the property.

Alternatively you 100% insure then you have to pay significantly higher premiums. (you can pay me now or pay me later). But if the home is worth less than the cost to rebuild, then perhaps some will insure up to the depreciated value and plan to take the insurance money and walk if there is a catastrophic fire.

I asked what are people on fixed incomes supposed to do? She said many are forgoing insurance because they simply cannot afford it. Or they are buying piecemeal insurance for theft etc from an insurance company and buying the California Fair plan for fire. But apparently that is expensive and not a good insurance plan. Rents for working class will also increase to cover the cost of insurance.

This will definitely put a lid on property sales because buyers will need to not only afford the mortgage but the insurance.

I hope the California state government steps in as this is a catastrophe waiting to happen.
 
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As a Florida Licensed Health Insurance agent (I do not do Property & Casualty, aka home and car insurance), I can say the premium increases in CA are solely due to fires. Insurance is all about spreading out past/future losses over all the subscribers. With health insurance, a loss is sickness, chronic illness, cancer, pregnancy, and disability. That is why health insurance premiums skyrocketed, insurers were required to cover pre-existing conditions and all current health issues, causing a significant loss, and their only recourse is to make it up by increasing premiums and increasing deductibles (which could be considered NOT covering pre-existing conditions).

In 2004-2005, Florida was bludgeoned by several hurricanes, causing most insurers to pull from reinsurance (insurance on the insurance companies - in case their losses are more than their cash on hand). As a result, many stopped insuring Florida residents. Coastal Floridian homeowners could not get insurance, so Governor J. E. Bush ("Jeb") and a Republican majority created Citizens Property Insurance, which they pay high premiums and every homeowner NOT with Citizens pays to help keep the government-run insurance going (like a tax).

With California, the fire losses were so huge that they can't afford to pay for homes with their current income when the next firestorm hits. That is why they went up. And who pays? Everyone across the USA. Yes, CEOs are paid tens of millions of dollars, but cutting their pay will only cut a few bucks off everyone's premiums. All in all, more frequent natural disasters and skyrocketing home prices will cause everyone to pay more.

TS
 
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