Bay Area congressional representatives hope to lure property insurance companies back to California with legislation that could reduce their losses by giving property owners financial incentives to improve emergency preparedness.
U.S. Rep. Mike Thompson, D-St. Helena, announced bipartisan legislation on Thursday that would establish a grant program and offer tax breaks to property owners who take measures to fortify their property against fire and other disaster threats. The legislation was co-authored by Doug LaMalfa, R-Richvale, and co-sponsored by Rep. Jared Huffman, D-Marin, and others.
The bill, House Resolution 7849, is called the Disaster Resiliency and Coverage Act. It comes after several major insurance carriers announced that they would stop offering property insurance in California and would not renew existing policies. By motivating disaster mitigation work by property owners, the legislation aims to lower insurance losses and convince insurers that the state is worth operating in.
“Our bill is a clever way to solve this problem: it incentivizes disaster resiliency, which will in turn bring insurers back to the marketplace,” Huffman said.
Under the proposal, grants of $10,000 for resiliency work would be offered to property owners through the Federal Emergency Management Agency. Tax breaks of 30% of resiliency costs would also be offered to help larger property owners recover the cost of preparing their property through hardening techniques, including strategies like creating defensible space and using fireproof building materials.
Thompson and Huffman announced the legislation at a press conference with local leaders in the Coffey Park neighborhood of Santa Rosa, which was devastated by the Tubbs Fire in 2017. The wildfire destroyed a total of more than 5,600 structures and killed 22 people.
“As insurers increasingly pull out of housing markets, California homeowners and business owners are struggling to find coverage,” Thompson said. “Families are increasingly relying on their insurers to help them rebuild.”
The state’s three largest insurance carriers — State Farm, Allstate, and Farmer’s — cover 40% of policies in the state, according to Thompson’s office. The companies have cited persistent wildfire and flood risks as reasons for abandoning the state.
State Farm announced in 2023 that it would stop accepting new policies and said in March that it would not renew 72,000 policies. Multiple other carriers, including USAA, Travelers, Nationwide, Chubb, and The Hartford, have also limited or restricted coverage in the state, especially for properties in disaster-prone areas.
Huffman said many of the people who rebuilt after the Tubbs Fire would not have any option for affordable insurance coverage in today’s landscape.
“For many folks in California, it feels like disaster hits just as we’re getting our feet back under ourselves from the last big storm or wildfire,” Huffman said. “Crisis after crisis like this has led to insurers either fleeing the area or jacking prices up that are unrealistic for the average homeowner.”
Homeowners lose about 12% of their home’s value when it is uninsured, according to Thompson’s office.
Rohnert Park Mayor Susan Hollingsworth-Adams spoke at the press conference in support of the bill. She said the city would lose over $800 million in property value if homeowners couldn’t be insured.
The only new policies available in the state are those offered in the excess or surplus market, which allows approved out-of-state carriers to offer coverage at higher prices.
The bill also restricts the grant money from being treated as taxable income and advises states to consider disaster mitigation efforts when setting premiums. The bill will next be heard by the House Ways and Means and Transportation and Infrastructure Committees.
26 comments
Can we make it so that if they pull out of homeowners insurance they can’t offer other insurance in the state? I bet that would get their attention.
Blocking insurers to write business across all lines of business in a state would create a shortage of insurance capacity. This in turn would drive up premiums due to less competition. Bad idea.
These guys just don’t get it.
Insurance companies have too much exposure in California. They are reducing that exposure through non-renewal. No amount of risk reduction will bring them back.
Fearless
They are cancelling homeowners policies in all the western “fire” states. The westside of Carson City has been getting cancelled the past 3 years and I live on the eastside and my fire went up $310 a year lat year. My cousins in western WA have either been cancelled or the rates have skyrocketed . Insurance is just a ponzi scheme we all have to be involved in
You are welcome to self insure in California.
They would absolutely LOVE it.
CA has turned into a high risk sewer for insurance companies.
The state has other problems too that affect Auto insurance. My out-of-state company would not renew me when they found out that I drove to Oakland for work. They said their loss rate due to thefts and break-ins and carjackings was astronomical and they were not going to insure cars in California anymore until something was done about crime.
The insurance market is a racket.
Even with 50% down payment, the mortgage companies require insurance for the full value of the house. The insurance companies then tack on extra charges for the furniture and stuff that you put in your house. If you have dogs, a pool or a trampoline, etc they want to charge more. And they won’t write you a liability policy unless you have separate wildfire insurance.
I had to replace my roof this year, not because it was damaged – a recent inspection said it was still serviceable – but solely because it had surpassed AAA’s arbitrary 20 year rule.
It sounds like this legislation is only going to make costly home improvements necessary to get insurance.
Dogs bite, pools drown and trampolines are a source of broken bones and brain injury. Of course having those items are added to the insurer’s rating base. I don’t have any of those three, so my homeowners carrier doesn’t have the exposure.
Pools drown? And guns shoot people, right?
People drown in pools. There you go. Fixed it. Hope you can now comprehend.
Between the two of us, I’m not the one with a comprehension problem.
Sure those things increase exposure, but when you are required by the mortgage companies to be insured for more than you owe, and the insurance companies then in turn require coverage for things not even related to the structure, then there is defacto collusion. Homeowners are being squeezed.
What exactly is the logic for increasing rates if you have a dog? How does the dog relate to insuring a structure? You are personally liable if the dog bites someone, regardless if it is at home or on the street.
I heard that it was legislation that prevented homeowners from taking steps to help protect their house from the wildfires, such as not allowing clearing of fuel sources. If this is the case, perhaps it would make more sense to have our legislators stay out of the way and stop trying to regulate every aspect of how we go about our days. I think everything would be better if we could remove the officious interference from the nanny state legislator managing so much of what goes on in this state. Let the insurance companies work out with the customers the best way for them to insure. Insurance is a product and a business model. I cannot offer suggestions (well, good ones based off experience) but I would rather the real estate industry and the insurance industry work out with the customers the best way to reintroduce this model, without some pencil necks making rules so they can spit it off around election time.
Well, that’s the problem. The market is broken. The insurance industry’s way of “working it out with their customers” was to drop them.
Notice how it always creates work for businesses(that they invest in)
We had a healthy, competitive insurance market in California until the last two elected insurance commissioners, Dave Jones and Ricardo Lara, decided to use the power prop 103 granted them to deny justified rate increases. They failed to grasp economics 101: price controls create harmful side effects.
We don’t have a problem with some bad, greedy insurance companies. We have a problem with some bad, greedy, (and ignorant) politicians.
It’s a scam game the insurance companies are initiating with their fellow politician players to extort money from California homeowners. State Farm’s reported revenue 2023 was $104B – BILLION!!! – up from $89N in 2022. Who is losing money? Since when did the insurance companies become profit generating machines that produce nothing? They are nothing more than mafia-style middle men.
Hope;
1) State Farm is not a for-profit company.
2) Revenue increases do not mean their expenses are not going up faster.
3) I am a State Farm customer and I do read the financial summary they send out every year. California losses have been substantial.
4) no they are not “mafia style middlemen” .
Yes there is an extortion quality to State Farm Insurance. They know that mortgage holders are required to get coverage. They know that there are very limited options to get coverage. And so they require that homeowners get insurance that exceeds the coverage required by their mortgage obligation. For example if you have a shed they will increase the cost of your policy. Likewise their home inspectors will note faults on your property using a criteria that is stricter than a typical home inspector. They do this to increase their profits, and once again because they know a mortgage holder has very limited options.
my property location identifies as being in Ukraine fares a better chance of being insured.
If it’s wildfires they’re worried about, they should have two kinds of fire insurance. It would work like flood insurance. Obviously, you don’t need flood insurance if you live on top of a hill, and FEMA publishes flood insurance rate maps showing whether you’re in the 100-year flood zone or not. This determines whether your lender will require flood insurance or not. Wildfire insurance would work the same way. You would need it depending on your fire risk as shown in published fire risk maps. That way, people would have regular fire insurance (for regular house fires) and they would also have to buy wildfire insurance if they’re in a fire-prone area. This makes more sense than increasing everybody’s rates (or pulling out of California completely).
State Farm blew it and now they are trying to get money back from people who may never need their services in the first place.
Hows about DEMs running this state stop making STUPID decisions, laws, orders and executive orders?
Don’t hold your breath, can’t recall last time a DEM politician apologized and admitted they were wrong.
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Any business has to plan months, years, decades and to be able to do so there has to be political stability and regulatory certainty. Seems His Imperial Majesty Emperor newsom and his sycophants can’t go even a few months without changing to rules, passing new laws or having a fly by photo OP to announce another knee jerk plan. Which is why so many businesses have either stopped expanding their business footprint in CA or have flat moved out of the state.
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“California Gov. Gavin Newsom is pledging to fast-track more than half a dozen projects by the end of his term to remove or bypass dams that have blocked salmon from returning to the state’s chilly mountain streams and acting as the keystone of a complex ecosystem that sustains both economies and spiritual beliefs for tribes.”
https://tinyurl.com/bddh2nzh
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Monumental incompetence.
‘Klamath Dam Removal: ‘It’s an Environmental Disaster’
‘They purposefully made a disaster and are leaving taxpayers and the locals to clean up their mess’
https://tinyurl.com/4e4s7shn
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If same people running this state were managing a multi billion dollar company they’d be FIRED.
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IF you want CA fixed it’s very simple and is up to you,
STOP electing DEMs.
California is a sewer and getting worse……its even worse everywhere in Contra Costa County.
Go Big Red!!!!!!!
The government creates a problem.
It costs taxpayers billions of dollars.
The government attempts to resolve the problem, but it doesn’t.
It costs taxpayers billions of dollars.
The government attempts to resolve the problem again and doesn’t.
It costs taxpayers billions of dollars.
Only taxpayers can fix this insanity, but they won’t.
Why do we tolerate this?
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