Californians in Fire Risk Areas Turn to Expensive, Specialty Insurance Agencies
September 24, 2015 Leave a comment
Fire insurance for homeowners in California should be a safe assumption. After all, insurance companies exist to help people deal with the unexpected. But ask just about anybody who’s had to actually get their money from an insurance company and they’ll likely tell you that the company did everything they could to avoid paying out. So it’s not a surprise that most of the well known insurance companies, those that usually provide things like homeowner’s insurance, won’t insure homes in areas that are at risk of forest fire. It’s just too expensive.
But people still live in those areas, and despite all of the fires this year, or over the last ten years, many haven’t had to replace their homes, and might never have to do so. That doesn’t mean that fire insurance isn’t a good idea, or that they don’t want it.
Many of those people are turning to specialty insurance companies, or special units within larger companies, to insure their homes. These companies, like Lloyd’s of London or Scottsdale Insurance Company are known for insuring rare or very special things against pretty unexpected problems. They normally insure construction projects or rare art, not homes.
So the resulting policies are there, giving people coverage, but they can get pretty pricy. Those rates are not controlled the way State Farm or some other common insurance company’s rates are, so they can get pretty high for a small amount of property.
There is another option, called California FAIR, which is a consortium of insurers who do provide fire insurance, but they only provide property insurance up to $1.5 million. Which means if you have California FAIR, and you or a loved one are hurt or killed in a forest fire, that’s not covered.
According to the state Senate Insurance Committee, if things keep going in this direction, and regular homeowners keep having to turn to specialty insurers for fire protection, the state may have to step in and try to fix the situation.