Homeowners desperate as insurance companies limit business in CA

SACRAMENTO, Calif. — A last-ditch effort by some state lawmakers to make changes to California’s insurance regulations has failed, leaving the homeowners insurance market here in a precarious position.

For several years now, homeowners in rural — and increasingly urban — areas have grown more and more desperate, as the cost of their homeowners insurance has gone way up, with many people having to switch carriers after learning their original carrier will no longer offer them a homeowners insurance policy.

State Farm, Allstate, Farmers and AmGUARD are just a handful of the companies that have —  to varying degrees —  limited the way they offer homeowners insurance in California, with some refusing to write new policies altogether. Many companies cite the rising financial risks due to climate change, like wildfires; the rising cost of construction materials due to inflation and a regulatory environment that doesn’t allow them to raise their rates quickly or efficiently enough.

At the Capitol this week, as the legislative session is wrapping up, lawmakers failed to seal a deal that would have made it easier for companies to charge higher prices as an incentive for writing new policies and renewals once again.

Consumer advocacy groups like Consumer Watchdog blasted the potential deal as a “half-baked bailout” of the insurance industry and instead are calling for “a public, transparent debate to address insurers’ pullouts from the home insurance market.”

In a news release this week, California insurance commissioner Ricardo Lara said “Our current path is unsustainable” and that his department is “moving forward with a package of regulatory solutions that will streamline the Department’s rate review process, opening it equitably to public input — not just the entrenched interests that have benefited materially from the status quo.”

Governor Newsom told POLITICO a working group within his administration has been studying this issue for months, and a spokesperson told CalMatters the governor will have more to announce as soon as next week.

For now, without a solution in sight, homeowners might continue watching as insurance companies pull back from the market here in California.

“I don’t know what I’ll do if I can’t afford that house,” said Cathy Townsend, tearing up.

She lives in the Tuolumne County community of Sonora and never anticipated insurance problems when she bought her home in 2012.

“My payment has doubled and I’m not making any more money,” said Townsend, who is on a fixed income. “I can’t even afford, with the interest rates now, to move out of the danger zone… You know, I can’t even buy something that’s worth less than my home.”

Some people, like Laura and Charlie Callahan, are leaving the state altogether. They sold their El Dorado County home in 2020 and moved to Tennessee after their homeowners insurance costs more than tripled.

“We didn’t know what the future held for that —  if we even were able to get to keep getting insurance, much less how much we’re going to have to pay for it,” Laura told ABC10.

Commissioner Lara doesn’t dispute that something needs to happen.

“There is no doubt that because of climate change, our planet, country, and state are at an insurance crossroads,” he said. “In California, our ongoing partnership with the Governor and Legislature to improve conditions for the consumers, homeowners, and businesses that make up our insurance marketplace is critical to crafting lasting solutions.”

Inside the rising costs of homeowners insurance policies in California