New Insurance Choices Available for Homeowners and Business Owners in California

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Many property owners in California have taken proactive measures such as tree trimming and brush clearing to safeguard their homes and businesses against wildfires.

A new initiative by the California Department of Insurance aims to encourage insurance companies to offer more discounts for wildfire mitigation efforts in high-risk areas. This move comes as homeowners across the state face policy cancellations and increasingly turn to the California FAIR Plan for coverage, intended as a last resort.

Commissioner Ricardo Lara emphasized the need for reform in response to frustrations over outdated regulations. The reform is designed to foster inclusivity across diverse California landscapes, ensuring insurance companies expand coverage options beyond the FAIR Plan in areas with unique wildfire risks.

As part of these changes, the state has introduced its inaugural wildfire risk map pinpointing regions, including parts of Los Angeles, San Bernardino, and Riverside counties, where insurance coverage needs to be bolstered. The affected areas are characterized by high FAIR Plan policy usage and disproportionately high insurance premiums relative to local incomes.

Under the new guidelines, insurers will be required to enhance coverage offerings in these designated areas by the end of the year. Additionally, a proposed trailer bill attached to the California budget aims to expedite the implementation of these reforms.

Karl Susman from Susman Insurance Agency highlighted that insurers will now employ catastrophe models to determine individualized rates, ensuring fair pricing reflective of specific risk levels. This approach will empower consumers by providing clarity on their wildfire risk and recommending mitigation steps to reduce it.

The regulatory package mandates insurers to disclose policy details in rate filings, backed by enforcement measures to ensure compliance. Documentation standards for wildfire mitigation efforts are also specified to strengthen accountability.

Moreover, state law imposes a one-year moratorium on insurance policy cancellations or non-renewals in areas adjacent to wildfire perimeters following a declared state of emergency by Governor Gavin Newsom. This protection extends to all residential policyholders affected by wildfires, offering security amid recovery efforts.

For more information and updates, visit the California Department of Insurance’s website.

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