CA Insurance Commissioner Bans Insurers from Dropping Homeowners in 2021 Wildfire Zones

The moratorium issued by California Commissioner Ricardo Lara requires insurers to keep these policyholders for a year and covers people who live near some of 2021's largest wildfires, such as the KNP Complex in Sequoia National Park.

Source: Sacramento Bee | Published on November 11, 2021

The Eagle Creek fire on the night of September 3rd 2017.

Lara's order means that moratoriums are now in effect in parts of 31 counties affected by wildfires this year, affecting 618,000 homeowners. Homeowners in Fresno, Stanislaus, Calaveras, Tulare, Shasta, Del Norte, Humboldt, Inyo, Kern, Lake, Mendocino, Siskiyou, Tuolumne, and Trinity counties are affected by the new order.

Lara's decision demonstrates that the insurance crisis in California wildfire country is still a persistent issue, despite signs of improvement in recent months.

Following several years of rate increases, some of the major insurers have informed the Department of Insurance that they intend to expand coverage in areas that they had previously abandoned. For example, Allstate Corp. has informed the state that it intends to sell new policies in California for the first time since 2007.

Nonetheless, many homeowners, mostly in rural areas, are still having difficulty finding a company willing to take them on. Insurance companies dropped tens of thousands of homeowners after the 2017 and 2018 fires cost them billions of dollars.

The majority were assigned to the FAIR Plan, the state-mandated "insurer of last resort." A typical homeowner who had been paying $2,000 a year in insurance premiums saw his or her premiums double or triple.

The latest order covers zip codes in or near the footprints of the River Complex, French, Washington, Windy, KNP Complex, and Hopkins wildfires, in addition to people living near the KNP Complex fire.

Valley residents were evacuated as a result of the KNP fire.

The KNP fire, which was started by a lightning strike in early September, has been one of the most dramatic of the year's fires, prompting evacuation orders in parts of Fresno and Tulare counties and threatening ancient sequoia trees in Sequoia and Kings Canyon national parks. As of Wednesday, the fire had burned over 88,000 acres and was 75 percent contained.

The Windy Fire, which is located just south of the KNP burn zone, has consumed 97,000 acres and was 95 percent contained as of Wednesday. It was also sparked by lightning.

Under SB 824, a law he authored as a state senator in 2018, Lara has the authority to issue the moratoriums.

"The law gives wildfire survivors much-needed breathing room from having to immediately shop for insurance as they recover, while stabilizing the insurance market as well," he said in a prepared statement.