As California firefighters continue to battle raging wildfires that have spread throughout the state, reporting has confirmed that at least 17,000 California homes will soon lose their fire insurance.
This news comes as many insurance companies have halted new policies in a state that has become rampant with extreme weather disasters.
An Ongoing Wildfire Issue
Wildfires have always been an issue in the Golden State. However, recent years have seen more extreme and large fires than ever before.
So far, more than 832,000 acres have already burned in California this year alone. Experts have sounded the alarm, as high heat from climate change may continue to make California’s wildfire issue more severe with each passing year.
The Destruction of Homes
Unfortunately, with these rampant wildfires, destruction also becomes common. This year, more than 1,000 homes and businesses have been destroyed because of wildfires.
This tragic situation has impacted thousands of Californians. Now, a new insurance report could further affect residents in California.
Terminating 17,000 Fire Insurance Policies
Liberty Mutual has recently announced that it will completely drop fire insurance for about 17,000 California policyholders.
This will take place over the next three months. According to the insurance company, these terminations have nothing to do with California’s ongoing wildfires.
Why Liberty Mutual Is Dropping Insurance Policies
Instead of blaming the increase of wildfires in the Golden State, Liberty Mutual is claiming that its outdated technology is to blame.
The company explained that it’s retiring an “antiquated” technology that it used to use. This technology managed its policies and now “it is not feasible to create a new system to support this product in California.”
How This Affects Californians
Liberty Mutual’s fire insurance only covers about 10% of all California homes with this type of insurance. Therefore, about 17,000 Californians will be affected.
While only a small percentage of California homeowners will be impacted by this announcement, thousands will now find themselves in a difficult position in the middle of the state’s fire season.
Other Options
Liberty Mutual has suggested that these 17,000 affected policyholders could turn to Safeco, their subsidiary, to get new fire insurance.
Safeco, however, has recently raised its own fire insurance rates by about 10.5% this year.
An Ongoing Insurance Crisis
This recent news that Liberty Mutual is completely halting its fire insurance policies comes as many companies have struggled in California.
Raging wildfires have forced many companies to pay out billions in claims every single year. As a result, this has caused some companies to halt new policies — or even pull out of the state completely.
Homeowners Are Struggling
Across the board, California homeowners are struggling the most because of this insurance crisis.
Some homeowners who have been able to keep their fire insurance have had to make improvements to their property to even stay covered. Others have seen their rates skyrocket.
Struggling to Find Coverage
Those who have been dropped by their insurance companies — or those who cannot find an affordable insurance option — have had to turn to the state for assistance.
California’s FAIR Plan was created to help residents receive fire insurance, particularly if they live in high-risk areas and cannot get any private insurance policies.
An Expensive Option
While the FAIR Plan has greatly helped some, it has recently become an incredibly expensive option.
Californians have stated that they have ended up paying more than $2,000 a year in only fire insurance while a part of this state plan.
An Ongoing Crisis
As wildfires continue to become a major issue in the state, insurance companies may continue to either halt new policies or flee California and stop doing business there altogether.
As a result, Californians — especially those in high-risk areas — may continue to struggle in their quest to find affordable home insurance.
