Insurance pullback has rural residents worried

Editor’s note: This story incorrectly stated that Farmers Insurance is not writing homeowners insurance policies in California. Farmers Insurance is in fact still writing fire insurance in California, although on a limited basis. Homeowners should check with their agent to see what restrictions they may have.

CLAYTON, CA (July 24, 2023) — Recent announcements by State Farm and Allstate insurance companies that they will no longer write new fire insurance policies in California have residents in Morgan Territory/Marsh Creek and other high fire risk zones worried.

Homeowners now must obtain coverage from the California FAIR PLAN insurance association or from secondary “surplus lines” carriers.

Morgan Territory property owner Lauren Fenner experienced the stress of trying to renew her coverage with major carrier GEICO and struggled to find replacement fire coverage through any of the known carriers in the state.

“We tried several different companies and they all said they weren’t writing California policies,’’ she said. “We weren’t surprised because it happened before, but we got very worried calling around.”

The reason fire insurance is difficult for Morgan Territory and Marsh Creek is that they there are residential properties and natural areas that are surrounded by high fire fuel areas.

Home sales

Getting coverage is also problematic when people are trying to buy or sell homes.

Julie Rogers, the owner of Weichert Realtors, said she has heard from other real estate professionals that potential buyers of Morgan Territory properties reconsidered buying in the area because of the uncertainty around homeowner insurance.

Mortgage lenders will not approve loans without fire insurance being in place.

State Farm said that it will continue to service existing policies but will no longer write new fire insurance policies. Other companies reportedly have cancelled existing policies in the very high-risk areas.

Janet Ruiz, spokesperson for the Insurance Information Institute, denied reports that none of the 115 state-approved fire insurance carriers in the state would write new policies but declined to name any specific companies that are doing so.

Fenner’s experience contradicted this insurance industry claim. After her policy was cancelled because she and her husband live in a what is known as an urban/wildland interface area, she contacted various insurance carriers and independent brokers looking for coverage.

None of them could find any insurer willing to take on the fire insurance risk for the five-acre wooded property.

“When these fires hit now, they burn down whole cities,’ she said. “The further we got into with no results, it got a little scary.”

Fair Plan

They lucked out with AAA who got them coverage with the California FAIR PLAN. It included a higher deductible and a little higher premium, she said.

The Cal FAIR PLAN is an association started by property insurance companies to provide fire insurance in high-risk areas where people cannot obtain coverage from other carriers.

Another group financially impacted by the fire insurance crunch is the insurance brokers, Antioch Farmers Insurance agent Curtis Holzer said.

Farmers is also not writing new policies for fire insurance and that is costing agents their commissions on the new policies. It’s also preventing them from collecting their shares when those policies are renewed, Holzer said.

Norm Hallquist
Norm Hallquist

Norm Hallquist earned his bachelor's degree in journalism from Cal.  He has returned to his first love following interim careers as a U.S. Navy officer and as a workers' compensation lawyer.  He lives in Concord.