Fire insurance policies: an endangered species

SAN MATEO COUNTY, Calif. - With fire season now just peaking and plenty of weeks still to go, we have already racked up California's worst ever fire season.

On a regular basis, homeowners in the urban wildland interface are getting multiple shocks from massive insurance increases, less coverage and outright cancellations.

Tobias Freccia's homeowners insurance policy for his home in rural San Mateo County was abruptly canceled in June. That gave him just three months to find a replacement for his $5,700 a year policy. It took two months, but his broker finally got a quote: a mind numbing $34,000. 

"That was just not only a shock but something that's untenable for a family to support," said Freccia.

To protect homeowners from an insurance desert, the state has imposed a one-year cancellation moratorium in wildfire counties against non-renewals, but San Mateo's had expired. 

"This is the worst I've ever seen the market for home insurance in the state of California,: said multi-line insurance broker David Shaffer. If you must pay far more, do you get any better coverage?"

The answer is no. 

"The higher premiums are actually giving you inferior coverage and you should even be thankful that you can get your house insured," said Shaffer. 

"We are getting reports of doubling, tripling, quadrupling and, in recent weeks, I've been hearing six-figure quotes for high end, high value homes," said consumer advocate Amy Bach of United Policyholders.

The best alternative is a basic fire policy from the California State FAIR Plan. It covers fires and little else, but is better than nothing. 

"But, the FAIR Plan policy does not cover personal liability. It doesn't cover water damage if a pipe breaks in your house and causes water damage. It doesn't cover theft," said Shaffer. 

That hard to find coverage must be purchased at extra expense from other insurers.

Freccia's homeowners insurance is now with the FAIR plan, plus additional coverage for essential things this insurer of last resort will not cover. "That comes out to $11,000, $12,000 annually," said Freccia. That's more than double and not nearly enough money to replace the home if it burns to the ground. 

"The problem is there's is not private market for people right now," said Ms. Bach.

Insurers say it's all because between 2011 and 2016, they paid out about $4 billion a year for wildfire claims nationally. In 2017 and 2018, Californian's alone submitted claims for more than $20 billion.