California Property Owners Struggle with Insurance Nonrenewals
Homeowners, renters, and businesses in California are facing increasing difficulties securing and maintaining property insurance, according to recent reports. A growing number of policyholders are receiving nonrenewal notices, raising concerns about the financial stability of property owners in the state.
KABC reported that approximately 2% of California policyholders received nonrenewal notices in 2023. Although this figure may seem small, it translates to tens of thousands of property owners losing their home or fire insurance.
Analysis of 2023 data from the California Department of Insurance revealed that nonrenewal rates were particularly high in communities that later experienced devastating wildfires, such as the Palisades and Eaton fires.
In the Pacific Palisades, 8.3% of policyholders were denied renewals, while Altadena saw a 7.5% nonrenewal rate. These nonrenewals, coupled with skyrocketing premiums even before the fires, are pricing some residents out of their homes.
Will Chandler, an Altadena resident, told KABC that he decided to forgo coverage after his insurer increased his premium by $800 annually. This decision made him hesitant to leave his home during the January blazes.
“I felt like I needed to do everything in my power to protect the home,” Chandler said.
The rising costs of insurance and insurers pulling out of certain areas have ripple effects throughout California, placing a burden on other residents. Uve Karbenk, co-owner of a 33-unit residential building in San Bernardino, had to quickly find coverage after his insurer canceled his policy, reports KABC. He ultimately secured costly out-of-state “piecemeal” coverage, which increased his premium from around $14,500 to approximately $42,000.
“For new tenants, it definitely has to go up,” Karbenk explained.
Amy Bach of the nonprofit United Policyholders noted that the insurance challenges are expected to persist for all property owners and businesses in California. Providing solutions is a complex effort.
California’s FAIR Plan offers coverage to homeowners who cannot obtain private insurance. However, this plan is costly and not ideal for long-term solutions.
One of the primary driving factors behind the rise in premiums and coverage scarcity is the escalating frequency and intensity of extreme weather events. Climate change and rising global temperatures are supercharging weather patterns, leading to increased risks.
In the long term, reducing pollution from fossil fuels is critical to creating a more stable climate. In the short term, homeowners can take steps to increase the resilience of their homes, such as rebuilding with fire-resistant materials.
