California Home Insurance Crisis Expanding to New Construction
ROSEVILLE, Calif. — California’s home insurance crisis continues to evolve, now impacting newly built homes in areas not typically considered to be at high risk for wildfires.
In West Roseville, where new housing developments are abundant, insurance brokers are facing increasing difficulties in securing policies for new homebuyers. Many prospective homeowners are being forced to turn to the California FAIR Plan, a state-required, high-cost fire insurance option that serves as a last resort when other insurers decline coverage.
Aurora Mullett, managing partner at Sky Insurance, an independent insurance broker in Rocklin, stated that West Roseville’s 95747 ZIP code is among those where insurance companies are reaching capacity limits. This means they are nearing or exceeding the maximum number of customers allowed within a five-mile radius, leading to a pause on writing new homeowner policies. Mullett noted that similar issues are arising in Rocklin’s 95765 and Folsom’s 95630 ZIP codes as well.
The California Department of Insurance (CDI) explained that when an insurance provider’s new policies increase the concentration of risk in a particular area, they can reach a point where they cease writing new business there, at least until risk concentration changes. The CDI also pointed to California Insurance Commissioner Ricardo Lara’s Sustainable Insurance Strategy, fully implemented at the beginning of the year. This strategy aims to encourage insurers to return to providing broader coverage throughout the state and improve availability, by offering industry-sought tools and reforms to companies that agree to write more policies in wildfire-prone areas.
However, these changes won’t happen instantly, prompting developers and brokers like Christopher Brown, principal of the NEXT Group of Companies, to stay proactive. “It’s solvable. It seems like we’re moving through it, but it’s definitely a challenge,” Brown said.
Brown spoke with ABC10 at The Belvedere, a new development in Historic Roseville for which his company serves as the broker. “We just started sales. We’re hoping to have first move-ins this summer,” he said about the 18-townhome development. “We have over 1,000 people on an interest list.”
Despite strong interest from the area, Brown now contends with insurance issues that were previously irrelevant for new construction. “This month is my 30th year in the business, and I’ve never had insurance issues – ever. It’s always just been one of those things: our homes are completed when they’re completed. You call your insurance agent and it’s taken care of,” Brown said. “Now, we actually had to go to the extra step of adding disclosures to our purchase agreements because we just don’t know what’s going to happen.” Though he hasn’t encountered insurance problems at The Belvedere, Brown has observed them at other projects throughout Placer County.
“We’ve had some homeowners that were able to get insurance within the community, no problem. And we had homeowners – within weeks or months of each other – then had to go and get insurance from FAIR Plan,” Brown said.
