Insurance Companies Removing Coverage In CA By ZIP Codes: "Isn't That Redlining?" Essentially, Yes
Graeagle’s fire hall was packed with close to 200 community members on the evening of Sept. 20. Everyone had one thing in mind: How to make sense of the recent spate of refusals and non-renewals by their home insurance companies, triggered by recent wildfires. Many looked worriedly at the cancellation or non-renewal notices they brought with them; many were angry. Chuck Bowman, the Graeagle Firewise Community coordinator, welcomed Ted Dobbs, a commercial and personal insurance underwriter for 40 years. He’d given this same talk two years prior to an audience of 50, he said, but recent, devastating California fires had insurers bailing out of the market where, as Dobbs put it, “people are living near trees.”
Dobbs comes from the “company side,” and he gave the perspective of someone who made assessing risk a career. He wanted to help people understand what they were up against, and why. Insurers were kept from raising their rates by the Dept. of Insurance. Insurers couldn’t continue, at present rates, to insure entire areas which, as the fire in Paradise proved, could go up in flames.
In the meantime, getting out of the business was the safest way for insurers to avoid the possibility of tremendous losses. They were taking entire zip codes out of their portfolio. “Insurance company methodology,” said Dobbs, “is by zip code.” “Isn’t this redlining?” asked one member of the audience. Dobbs stopped for a moment before he said, essentially, yes.
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Dobbs gave his personal example. He has a cabin in Calavaras County, an area that has had disastrous fires in the past 10 years. He’s created defensible space and done everything else to make the cabin fire resistant. After his insurance was cancelled, he called 14 or 15 different agents. Most came back within a day and said, “Bad zip code.” His conclusion — none of the things he could do to prove his home was fire safe mattered. He ended up getting the Fair Plan. And, in the end, that’s what he recommended for most of the people in the room. In addition, since the California Fair Plan only covered his fire insurance, Dobbs said homeowners will need a wraparound plan, typically fairly cheap, to cover the rest of their home insurance and liability needs.
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https://www.plumasnews.com/where-theres-smoke-theres-no-fire-insurance/