As he looks at the ruins of his home destroyed by a deadly fire in the Los Angeles area, Sebastian Harrison knows it will never be the same again, because he didn’t have insurance.
“I knew it was risky, but I had no choice,” he told AFP.
Harrison is one of thousands of Californians who have been forced to go without a safety net in recent years, either because their insurance company dropped them, or because premiums became too high.
After a massive fire swept through America’s second-largest city, killing more than two dozen people and leveling 12,000 buildings, some people are now counting the steep costs, Harrison’s home included, among them.
His own piece of what he called “Paradise” stood on a hill overlooking the Pacific Ocean, where the Malibu runs in the badly affected Pacific Palisades neighborhood.
The three-acre plot, which contained his house and a few other buildings, was always expensive to insure, and in 2010 was already at $8,000 a year.
When the bill reached $40,000 after the pandemic, he decided he couldn’t afford it.
“It’s not like I’ve bought myself a fancy car instead of getting insurance,” the 59-year-old said.
“It’s just that food was more important to me and my family.”
For former actor Harrison, the emotional strain of losing the home he lived in for 14 years is compounded by the knowledge that without help from the state or national government, he has lost everything – even his There are still mortgage payments left to make.
“I am very worried because this property is all I have,” he said.
climate cost
It is becoming more difficult to insure property in California.
Well-intentioned laws meant to prevent insurance companies from unfairly raising prices are colliding with the growing risks of a changing climate in a part of the world that now regularly sees devastating wildfires near populated areas.
Faced with rising claims – more damage, and higher repair costs due to the rising price of labor and materials – insurance companies turned tail and left the state en masse, abandoning existing customers and refusing to write new policies. .
Even the big names in the market like State Farm and Allstate have retreated.
Officials in the state capital, Sacramento, have been concerned for some time.
Last year Insurance Commissioner Ricardo Lara introduced reforms aimed at encouraging companies to return, including giving them more leeway to raise their premiums to better match their costs.
But the huge and inevitably very costly fires that have erupted during California’s rainy season – it hasn’t rained for eight months around Los Angeles – have reinforced the idea that the state is becoming uninsurable.
“I don’t know yet, because … my biggest fear was that we were going to have a catastrophe of this nature,” Lara told the San Francisco Chronicle over the weekend.
Even the state-run insurer of last resort, a plan designed to provide minimal coverage for people locked out of the private sector, may struggle.
The California FAIR Plan was created in 1968 and is outlined by every insurance company operating in the state as a requirement for their license to operate.
But the number of people now resorting to the scheme means its $200 million reserves are dwarfed by its liabilities. (The reinsurance sector helps keep it liquid.)
‘They’re going to leave me’
The insurance sector is set to be further tested by the massive damage caused by the Palisades and Eaton fires, with California issuing an order requiring companies to refuse to drop or renew customers in certain affected areas for a year. Has been stopped from doing.
That’s little consolation for Gabriel Gottlieb, whose home in Pacific Palisades escaped the flames.
“My insurer has laid off many of my friends… and I’m worried that they will eventually lay off me too,” he told AFP.
“They’re basically already saying ‘good luck with the year ahead!'”
Even in the best-case scenario, home insurance in California is about to get much more expensive, as state reforms filter through by allowing increased prices in locations more vulnerable to wildfires.
“Real estate and taxes are already too high in California,” said Pacific Palisades homeowner Robert Spoerri, who was dropped by his insurer last year.
“If insurance gets even higher, who will want to live in this state?”
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
