California: Cancelled Insurance Policies Leave Wildfire-Affected Homeowners In Trouble (X image @ShirionOrg)
California, US: The Los Angeles wildfire came at a vulnerable moment for California, as the state has been battling with strangling homeowners insurance crisis. At the end of 2024, State Farm, one of the biggest insurer in California cancelled hundreds of homeowners’ policies in Pacific Palisades, the high end region which is now being ravaged by the wildfire.
The company claimed that the move was an attempt to avoid “financial failure” of the company, as the frequency and severity of wildfires is growing in the State, especially in at-risk zones. However, as the blazing fireballs continue to rampage the region, many will only be able to get back through the help of insurers.
In April 2024, State Farm announced that it would have canceled a total of 72,000 policies in the state for houses and apartments, 30,000 of which were homes reported ABC. State Farm said about 1,600 insured homes in Pacific Palisades lost coverage because of the decision. The move was after nine months it announced that it wouldn’t issue new homeowners policies in California.
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Some ZIP codes saw a large percentage of their policies with State Farm being discontinued. More than 65 percent of policies in ZIP code 95033, in the Santa Cruz mountains, ended last summer, and nearly 48 percent were cancelled in 95409, reported CBS News.
While other insurance companies did announce cancelation of policies, they have limited the terms and conditions of the insurance and cited the rising frequency of wildfires in the state as the reason behind it.
In the wake of absence of private insurers restricting the conditions for wildfire coverage, residents have sought protection for their properties under California’s FAIR Plan. The scheme is run by the state of California extending coverage to residents who cannot afford traditional home insurance. The report cited data from CapRadio to report that the number of policies under the FAIR plan has more than doubled since 2020, reaching 452,000 in 2024, as reported by Newsweek.
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The wildfire that started on Tuesday has already killed 5, and displaced nearly 100,000. At least 1,000 buildings were affected. Reportedly, the fire have burned at least 1000 acres. The blaze is spreading at lightning speed with the dry hurricane-form wind gusting at nearly 100 mph.
(With inputs from agencies)
