No matter the risk of fire, California insurance companies cannot cancel your policy.
For Amy Bach, the turning point in her work came in 2018, when she heard the news that a million trees in the forests of Sierra Nevada had died. “I’m not a scientist, but I know it’s very dangerous,” said Bach, executive director of the nonprofit United Policyholders, which helps homeowners find insurance policies to secure their homes. properties. The way the California wildfire season unfolded in the years that followed proved her intuition wasn’t wrong – and completely transformed the way she did her job.
“Until this crisis hit, we were trying to help people focus on the quality of their coverage,” Bach said. “But now it’s about helping them hang on to any kind of policy.”
Last week, for the third year in a row, California banned insurance companies from revoking policy renewals for homeowners and renters living in high fire risk areas. The one-year moratorium will benefit at least 26,000 policyholders in Plumas, Lassen and Siskiyou counties, and will most likely be extended to those affected by the Dixie and Caldor wildfires, which still consume thousands of acres each. day. Last year, the ban covered 2.4 million homeowners in the state.
The measure succeeded in giving residents a sense of calm, said Sarah Anderson, professor of environmental science and management at the University of California at Santa Barbara, who studies how wildfires affect the distribution of funds. public. In 2019, insurance companies failed to renew the policies of 235,274 customers living in postal codes with a high risk of being burned by wildfires – a 61% increase statewide from the previous year, according to the California Department of Insurance. In the 10 most fire-prone counties, non-renewal increased 203%.
Non-renewal of home insurance policies can make low-income residents particularly vulnerable. When insurance companies abandon their policies, homeowners often have only two options: continue without insurance or sign up for California’s FAIR plan, which is expensive compared to other alternatives and doesn’t offer as much coverage. The FAIR plan only covers costs caused by fire, lightning, storm or other structural disaster on the home, but homeowners must pay extra dollars to get coverage for their belongings, unattached structures like their garages or fences, or additional living expenses. that the disaster could cause (like staying in a hotel).
Previous research has found that 76% of residents in moderate to high fire risk areas are white and wealthy. But there are still around 12 million socially vulnerable people living near fire zones – and they are twice as likely to be heavily affected by a fire. Indeed, many do not have the resources to mitigate their properties before the fire arrives and, after the emergency, they often cannot afford to rebuild.
“Communities of color and poor communities tend to have less of what we call political efficiency or political capital. It’s because they have less time and less money to invest in the kinds of activities that get you what you want from the political system, ”says Anderson. Last year, Anderson co-authored a study that found that in all western states, federal assistance in the aftermath of wildfires is mostly found in white, educated, high-income communities.
According to natural resources economist Andrew Plantinga of the University of California at Santa Barbara, the fact that California has had to impose the same moratorium on insurance cancellation for three consecutive years casts doubt on “whether the [state’s home insurance] system is truly up to the task of managing these rapidly evolving risks.
Rather than year after year cancellation bans, what is needed, he says, is a more nuanced approach to insurance law. This includes changing policies that “basically subsidize people to move into these areas”.
From a larger perspective, “we have to realize that we have to live with wildfires, we can’t pretend that every year is an abnormal year,” Anderson said. “What changes do we need to make so that we can live with it rather than fight it, which has frankly been our mantra since the 1910s. We’ve always thought, ‘Oh, well, we’ll fight to get out of it.’ And the point is, we can’t.