By Lorie Ham
There are some concerning trends in homeowner insurance in California lately. You may have noticed that many companies are no longer writing new policies, largely due to the number of wildfires in California over the last few years. California Insurance Commissioner Ricardo Lara stated recently that on May 26 State Farm General Insurance Company announced it will temporarily stop writing new homeowners’ and certain commercial insurance policies in California. Allstate paused new homeowners business in November of 2022.
“I believe companies are pausing new policies or leaving the state altogether because writing homes has not been profitable,” states Jerry Linscheid, Chief Executive Officer for Mennonite Aid Plan/Mennonite Insurance Services. “There could be several factors, but wildfires has to be the top reason. It is increasingly difficult for a company to get off of a policy they deem too risky, so the companies are opting to not insure new properties in the first place.”
Actions such as these can cause those looking for homeowners insurance a great deal of concern. However, according to The Conversation insurance companies pulling out of high-risk high-loss markets isn’t anything new. It’s a trend Florida and other hurricane and flood-prone states know well. “As losses from natural hazards steadily increase, research shows it’s not a question of if insurance will become unavailable or unaffordable in high-risk areas – it’s a question of when,” states the article.
The article goes on to say that for those without any other options, some states like California, Florida, and Louisiana, are trying to fill the gap. In California, the privately insured FAIR Plan, in existence since 1968, wrote close to 270,000 policies in 2021, nearly double the number in 2018. For areas dealing with floods, there has also been the National Flood Insurance Program since 1968.
Some efforts being taken by California Insurance Commissioner Lara include Fair Plan Reforms, Sponsoring New Insurance Protections, and working with the Governor and Legislature to increase wildfire mitigation efforts. Commissioner Lara is also now mandating insurance companies to recognize and reward wildfire safety and mitigation efforts made by homeowners and businesses. Commissioner Lara’s regulation is the first in the nation requiring insurance companies to provide discounts to consumers under the Safer from Wildfires framework created by the California Department of Insurance in partnership with state emergency preparedness agencies. The regulation is now state law and enshrined in the California Code of Regulations.
What can you personally do at a time like this? Here are just a few suggestions from Mennonite Insurance:
- If you have a decent policy, we recommend you do everything you can to keep it. Pay your premium on time. Our ability to reinstate a lapsed or cancelled policy may not exist.
- This is not a buyer’s market. Don’t assume you can get a better deal with another company. We will help you shop around, but keep your policy in place until you are sure you want to make the move.
- If you get a notice from your home insurance company that your policy is being cancelled or non-renewed, contact us as soon as possible. It may take us longer than in the past to find coverage for you.
You can also make efforts to reduce your risk of being affected by a disaster. Some suggestions from an article in CalMatters include making homes less likely to burn, flood, or collapse, which makes them feel less risky to insurers. Some ways you can do that is by installing fire-resistant vents, clearing out vegetation under decks, installing double-paned windows which are less likely to explode under extreme heat, and cutting back trees so they are further from your house. More suggestions can be found on Insurance.CA.Gov.
If you have any questions about what you can do, Mennonite Insurance is happy to help. “We are still very much writing new home policies in California,” states Jerry. “We are restricted as to who we can insure, and we are not writing any new business in the mountains, but we welcome new California business. Our plans are to continue to write homes in California, Washington, and Oregon for the foreseeable future.”
If you have lost your insurance, please feel free to reach out, but be aware that Mennonite Insurance does have some restrictions. “Basically, we are restricted to members of Anabaptist churches (Mennonite, Mennonite Brethren, Brethren in Christ, Missionary Church, Church of the Brethren) and anyone who has a significant connection to those churches (alumni of Mennonite school, employed by a Mennonite agency, resident of Mennonite retirement community),” continues Jerry.
You can contact Mennonite Insurance at [email protected] or by calling 559-638-2327.
