California aims to lower fire insurance costs for homeowners
SACRAMENTO, Calif. (AP) — California moved Wednesday to become the first state to lower insurance costs for property owners who make improvements to reduce their fire risk, the state’s insurance commissioner said as wildfires again flared across the heat-stricken state.
But the pending regulation still allows insurers to drop property owners’ insurance entirely if they deem the site too risky, a consumer advocacy group said.
Insurance Commissioner Ricardo Lara said the regulation is the first in the nation requiring that insurance companies give premium discounts on residential and commercial coverage to customers who follow new insurance standards announced in February. They include having a fire-resistant roof, at least 5 feet (1.5 meters) of defensible space around a home and removing vegetation overgrowth.
Additional reductions would be required if the property is in a community that has taken steps to reduce wildfire risk.
He submitted the final rules to the California Office of Administrative Law, which has 30 working days to make sure Lara complied with proper administrative procedures before they take effect.
Lara said in a statement that the new regulations “will help more Californians find insurance they can afford” and “will save lives by helping California become safer from wildfires.”
The pending regulations also require insurance companies to provide consumers with their property’s “risk score” and give them a way to appeal that score or classification assigned by the insurer. The California Association of Realtors said it had been long been pushing for fire risk score disclosures and praised that part of the regulation.
“Homeowners deserve to be rewarded for their efforts,” association lobbyist Anna Buck said in a statement.
American Property Casualty Insurance Association Vice President Mark Sektnan said the regulations “send a strong signal” to property owners to better prepare for wildfires, “but more needs to be done to manage the increasing climate-induced wildfire risk in California while also protecting the accessibility and affordability of insurance.”
Seren Taylor, senior lobbyist for the Personal Insurance Federation of California, said the discounts “must be based on data that aligns the cost savings with the actual risk reduction.” He said the state must also allow insurers “to use the most advanced technology to more accurately model California’s evolving climate risk, instead of depending on existing rules that require insurers to only look backward at historical data.”
The state’s firefighting agency said the retrofits and landscaping requirements to individual properties will augment the $300 million the state is spending to prepare communities for wildfires.
The advocacy group Consumer Watchdog supported the pending regulations but said they don’t go far enough.
The regulations give insurers “an enormous escape clause,” the group said. “It will allow insurance companies to sidestep discounts simply by claiming a property is too risky and refusing to sell a policy to the homeowner at any price.”
Deputy Insurance Commissioner Michael Soller called the criticism “irresponsible.”
“People will be safer, and we expect to see more insurance companies writing policies as a result,” he said.