Many Marin homeowners are understandably nervous about the risk of losing their property insurance these days.
In many cases, if their coverage isn’t being renewed, it’s costing a lot more to retain the same protection.
Insurance giants State Farm and Allstate’s decision to not write new policies in California is a sign that they are nervous, too, about their liability and the risk of wildfire and the rising construction costs.
It’s not a new problem, but it’s growing.
Marin ranks third in the state for the number of homes at increased risk of wildfire damage in the next 30 years.
The fact that the deadly and destructive wildland fires that we’ve seen in recent years across Northern California could happen here is the reason why Marin voters in 2020 passed a 10-year parcel tax to bolster local fire prevention and protection measures.
Those measures are taking hold on many fronts. They should not only make a difference to helping save homes and lives, but serve as an incentive to insurance companies to write policies here.
The goal is to reduce the risk, to both property owners and their insurers.
Voters can’t do much about construction costs, but they can improve the odds that their homes can survive a wildfire.
The tax has launched local initiatives aimed at making properties more fire-safe and creating “fuel breaks” to help slow down the spread of a wildland fire. The objective is to reduce the risk, which should be music to the ears of insurance executives.
Unfortunately, they aren’t making it any easier for consumers to get the coverage they need, in some cases leaving them little option but to turn to the state-run California FAIR plan. This last-resort option has drawn complaints that it provides less coverage for higher premiums.
But since 2018, the number of California FAIR policies has doubled.
The pattern of non-renewals is frustrating for consumers who have for years faithfully paid their insurance company for coverage.
That frustration hit a boiling point in the mid-1990s when Fireman’s Fund, which at the time was the fifth-largest insurer in the state and headquartered in Marin, started refusing to renew homeowners policies for Mill Valley customers.
The insurer’s objective was to reduce its exposure, a risk that became apparent after the 1991 Oakland Hills wildland fire, in which 25 people lost their lives and more than 3,000 homes were destroyed.
Other companies adopted the same strategy of not renewing coverage, leading to criticism of “redlining” where insurance providers focus on less-risky geographic markets. They said the strategy hurt homebuyers who couldn’t acquire lender-required policies.
The state insurance commissioner’s office got involved, urging insurance companies to suspend non-renewal practices.
The dilemma also led the city to get involved and launch an initiative of improving fire truck access on its narrow, winding streets and other protective measures.
The market responded then, but the Northern California fires over the past decade have heightened the industry’s concern about its risk.
As communities make a commitment and progress in reducing that risk, insurers need to be responsive. They should be partners with fire agencies that are working hard to make communities and neighborhoods safer by reducing the risk of an out-of-control destructive wildland fire.
Marin communities are doing that and insurers should be encouraging those measures, not leaving consumers facing a risky dilemma.
Clinton Mora is a reporter for Trending Insurance News. He has previously worked for the Forbes. As a contributor to Trending Insurance News, Clinton covers emerging a wide range of property and casualty insurance related stories.