California seeks to lower fire insurance costs for homeowners

SACRAMENTO, Calif. (AP) — California became the first state on Wednesday to cut insurance costs for property owners who are making improvements to reduce fire risk, the state’s insurance commissioner said as wildfires flared up again in the heat-stricken state.

But pending regulation still allows insurers to opt out of insuring property owners entirely if they deem a site too risky, the consumer advocacy group said.

Insurance Commissioner Ricardo Lara said the ruling is the first in the country to require insurance companies to provide insurance discounts for residential and commercial coverage to customers who follow the new insurance standards announced in February. These include having a fireproof roof, at least 5 feet (1.5 meters) of protected space around the home, and removing excessive vegetation.

Additional reductions will be required if the property is in a community that has taken steps to reduce the risk of wildfires.

He submitted the final rules to the California Office of Administrative Law, which has 30 business days to make sure Lara has completed the proper administrative procedures before they go into effect.

Lara said in a statement that the new rules “will help more Californians find insurance they can afford” and “will save lives by helping California become safer from wildfires.”

The pending rules also require insurance companies to provide consumers with a “risk assessment” of their property and give them the opportunity to challenge that assessment or an insurer’s classification. The California Association of Realtors said it has long pushed for fire risk disclosures and praised this part of the rule.

“Homeowners deserve to be rewarded for their efforts,” said association lobbyist Anna Buck.

American Casualty Insurance Association vice president Mark Sectnan said the rules “send a strong signal” to property owners to better prepare for wildfires, “but more needs to be done to manage the growing risk of wildfires caused by California’s climate and also to protect availability. and availability of insurance.

Serene Taylor, a senior lobbyist for the California Personal Insurance Federation, said rebates “should be based on data that links cost savings to actual risk reduction.” He said the state should also allow insurers to “use the most advanced technology to more accurately model changing climate risks in California, rather than being dependent on existing regulations that require insurers to look only at historical data.”

The state’s firefighting agency said the site upgrade and beautification requirements will increase the $300 million the state spends preparing communities for wildfires.

Advocacy group Consumer Watchdog supported the expected rules but said they didn’t go far enough.

The rules give insurers a “huge exemption clause,” according to the group. “This will allow insurance companies to bypass discounts by simply saying the property is too risky and refusing to sell the policy to the homeowner at any price.”

Insurance Deputy Commissioner Michael Soller called the criticism “irresponsible”.

“People will be safer and we expect to see more insurance companies writing policies as a result,” he said.

Copyright 2022 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or distributed.

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