Imagine losing your home to a wildfire only to realize that the insurance company you sent checks to every month was dropping your coverage. In California, that is a very real fear that is becoming a reality. Some people are even denied coverage just for being in a high fire-risk area. To shield residents from this practice, California banned insurers from dropping policies due to climate-related risks in fire-prone zip codes. But larger questions of how to address climate change and insurance policies remain: Profit loss may become so great that companies price some Americans out of home insurance altogether.
California’s wildfires have grown so costly and damaging that insurance companies — a homeowner’s last hope when disaster strikes — have increasingly been canceling people’s policies in fire-prone parts of the state.
On Thursday, however, California took the highly unusual step of banning the practice, a decision that exacerbates the insurance industry’s miscalculation of the cost of climate change.
The new policy imposes a one-year moratorium preventing insurers from dropping customers in or alongside ZIP codes struck by recent wildfires. The moratorium covers at least 800,000 homes around the state. The state has also asked insurers to voluntarily stop dropping customers anywhere in California because of fire risk for one year.
Advertisement
Related Stories
Housing Policy + Finance
Even With Inflation Running Hot and Elevated Mortgage Rates, Buyer Demand Rises
Mortgage rates will likely stay high for the next few months, but that doesn't seem to be deterring homebuyers
Financing
Q1 2024 Foreclosure Activity Rises Slightly
Data show New York, Houston, and Chicago topping the list of major metros with the greatest number of foreclosure starts during Q1 2024
Market Data + Trends
More Listings, Lower Rates This Week
The market perks up with a recent influx of fresh housing listings, and the week ending March 28 sees a dip in mortgage rates