A new rule in California will soon require home insurance companies to offer coverage in high-risk areas, helping homeowners who have lost or struggled to get insurance due to wildfires and other natural disasters.
“It’s frustrating. We paid them for a long time,” said Peer Johnson of Cambria.
Johnson has lived in Cambria for 20 years and says he was dropped by the home insurance company he had for decades.
“We had one claim. Tiles blowing off in the wind. We were reimbursed and got a new roof. Five years ago, we were dropped by them,” Johnson said.
After moving to another home insurance company, he says he was dropped once again last year.
“It’s very frustrating. We have a lot of equity in the house. Everything is up to date. There really isn’t any brush, It’s far away. We’re still getting dropped because we are technically in a forest,” Johnson said.
“The California insurance market has been very restrictive the last few years because insurance companies were no longer making any profit. They were losing money,” said Janet Ruiz, Insurance Information Institute director of strategic communication.
A new rule was recently put into place in California in an effort to change that.
“If you have 10% market share in California that means you have 10% of the policies, then you would increase 85% of that in your wildfire areas. Each year you’re expected to increase by at least 5%,” Ruiz said.
With increasing coverage, insurers will be able to consider climate change when setting their prices, which Ruiz says allows insurers to continue doing business in the nation’s most populous state.
“Throughout 2025, as insurance companies are able to use the cost of reinsurance, use catastrophe modeling in their risk pricing, then they are going to be much more optic to come back in,” Ruiz said.
“That, personally, would be wonderful for me,” Johnson said.
Johnson says he is now paying $2,800 per year on his homeowner’s insurance with his third company.
“We’re paying more and the coverage is less. I would say we’re paying about 25% more in the last few years,” Johnson said.
Ruiz recommends working with your local insurance agents and brokers to find the best policy for you.
This new regulation is set to take effect at the end of the month.
