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For many Orange County homeowners living near fire hazard areas, obtaining reasonably-priced home insurance is becoming just as much of a disaster as the wildfires themselves.
Editors’ Note: This dispatch is part of the Voice of OC Youth Media program, working with student journalists to cover public policy issues across Orange County. If you would like to submit your own student media project related to Orange County civics or if you have any response to this work, contact Digital Editor Sonya Quick at firstname.lastname@example.org.
Some Trabuco Canyon and Rancho Santa Margarita homeowners recently took to social media, shocked when their insurance companies raised prices and dropped customers following the 2018 California wildfires, leaving them scrambling to find alternative insurance options to protect their properties.
On the Facebook group, “Coto de Caza & Dove Canyon Residents,” as well as those using the popular neighborhood app “Nextdoor,” many homeowners who agreed to be interviewed for this story said they have been dropped by their insurance companies because of their homes being close to or inside a fire zone. Some are now paying higher rates to keep their current insurer.
Racquel Hernandez, a Rancho Santa Margarita homeowner, was insured with Travelers, until her rates increased from $1,200 to $2,200 this year.
Guy McIntire, another resident of Rancho Santa Margarita, was insured with AAA for 20 years until his policy was cancelled recently due to “proximity to brush.”
“There won’t be any progress in fair regulation until there is genuine outrage among the public and the media that will drive change,” McIntire said.
There is no brush near his house, he said, but portions of his neighborhood are included in a high fire area. As of 2019, AAA does not insure residents of Trabuco Canyon, Rancho Santa Margarita, and Coto de Caza, according to homeowners dropped by the company. AAA has confirmed this on its homeowner insurance website by stating the area is “outside the AAA territory” the company serves.
Requests for more information from AAA went unanswered.
According to Gerald Reed, an independent insurance agent specializing in Coto de Caza as well as president of The Summer Group Insurance Agency based in La Habra, companies have increased their prices due to the fire hazard as “companies got hit with billions in losses from last year’s fires.”
Insurance companies’ claims were seriously impacted by last year’s Northern California’s Camp and Hill fires, as well as the Woolsey wildfire in Southern California, which combined contributed to over $12 billion in losses, according to statistics from the Insurance Information Institute, a U.S. insurance industry association based in New York.
To pay for their losses, companies invest in reinsurance, in which the businesses purchase insurance to protect themselves from losses.
“Those reinsurance carriers also lost billions of dollars and have now decided to eliminate the risk of homes with certain distance to a brush hazard,” said Reed.
Because of the significant financial loss to insurers, higher home insurance costs do not stem entirely from the insurance companies, but rather the reinsurance carriers that provide companies with the financial security to insure homeowners, according to Reed. As an insurance agent, Reed said he understands there is no choice but to raise the prices or simply not insure homes in fire areas to avoid increased risk.
Some homeowners dropped by their insurance agencies or those who cannot afford the higher price are still searching for a new company.
Karean Levi, a Trabuco Canyon homeowner in the Coto de Caza development area, was dropped by National General Insurance at the end of 2018. With the 2019 wildfire season underway, going without insurance is risky and not a solution. After difficulties in finding a new agency with a fair price, Levi settled on Homesite Insurance.
Unfortunately, Levi says, “I had more coverage with the first company than the second.” However, she said it was the only agency she could afford that would cover her area.
Experts say the spike in insurance rates is also driven by insurance companies having to pay higher premiums from predictions of more wildfires due to climate change.
Fire safety concerns generally come up in the development approval process for controversial housing developments near high fire prone areas.
Rarely do you hear concerns about unpredictable fire insurance coverage.
For instance, during a recent public debate over approving a proposed 340-home project in fire-prone hills north of Yorba Linda – one that was ultimately approved by the Orange County Board of Supervisors in August – critics pointed to
A prior appeals court ruling that found the raised concerns over the project lying in a “very high fire hazard zone.”
Safety concerns for homes in fire-prone areas also have increasingly also become a statewide issue.
A September report from Irvine-based Corelogic found California metropolitan areas make up a significant chunk of the top 15 regions with the most homes at risk.
“It’s no surprise that California tops the list of the most homes at high-to-extreme wildfire risk, given the state’s size and population density, as well as the popularity of residential expansion into the wildland urban interface,” Tom Jeffery, senior hazard scientist at CoreLogic said in a press release. “The high density of homes located in wildfire-susceptible areas only increases the threat of future catastrophic events and the possibility of billion-dollar losses.”
In testimony submitted to the House Select Committee on the Climate Crisis in November, Rep. Gilbert R. Cisneros, Jr. (CA-39) said brush fires in Yorba Linda, Brea, Fullerton, “sparked fear, widespread power outages, and poor air quality for my constituents. As the world continues to warm, wildfires will become an increasing threat to our communities.”
With the ever looming risk of wildfires, the impact of continuing climate change and warming trends have become a focus of concern.
LeRoy Westerling, is a scientist researching climate and wildfire interactions at University of California, Merced. He says warmer temperatures contribute to a drier season, leading to a higher chance of wildfires. California’s mediterranean climate is normally dry in the summer and the start of fall with wet periods occurring throughout the rest of fall and winter. However, with climate change, rain has not appeared in a timeframe that could prevent wildfires from starting or at least reduce the number of wildfires.
“The dry season has been extended quite a bit this year. There’s no forecast of rain coming up any time soon,” said Westerling.
In addition to a shortage of rain, homeowners in high fire prone areas will continue to face challenges to in obtaining reasonably-priced insurance that covers damages from fire.
Westerling said insurance companies are used to operating under normal climate conditions. Instead of focusing on the change in climate, insurance companies think there is a “change in people’s behaviors and judge risks based on past experience,” Westerling said. Insurance providers do not focus on the science behind the wildfires, only on the losses they incur.
Meanwhile, some of professor Westerling’s colleagues are working to combine scientific research with home insurance by starting their own companies. By doing so, they will have access to more information on house and wildfire proximity, enabling them to focus on researching future wildfire projections to procure a better estimate of wildfire risks and adjust prices accordingly.
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