“You’re in good hands.” “Like a good neighbor, State Farm is there.” “Let Prudential be your rock.” “Nationwide is on your side.”

Man, all of these insurance company slogans are so reassuring. They really care! Do they, though? Capitalism says they only care as far as their bet to make a dollar rather than lose a dime takes them, especially in areas that are prone to natural disasters. There’s a reason flood insurance is separate from your standard, run-of-the mill home insurance policy.  

Fire insurance looks to be heading that direction, too. 

The idea is if we pool our resources and share our risks, and if tragedy befalls one of us, our shared investment will make the befallen whole. And paying for insurance isn’t always optional. If you’re still paying a mortgage (as are most California homeowners … 67 percent), insurance isn’t just a good idea. Mortgage companies require it. So, most of us dutifully pay up.

So what happens when your insurer, perhaps a company you’ve been with for decades, a company you’ve paid thousands of dollars to hedge your bet against disaster, suddenly tells you they’re dropping you like a hot potato? And what if, after shopping around, you discover no other insurance company is willing to take your bet? 

To top it off, we live in California, which means everything is more expensive—including building costs and homeowners’ insurance. I mean, it’s worth it, right? Ah, the Golden State, the white hot, yellow, orange, red-hot flaming Cheeto state with plumes of acrid black smoke bellowing into the sky. California. 

I think the fire that changed it all, that really made insurance companies ask themselves if they can accept California’s associated fire risks, was the 2018 Camp Fire that left the town of Paradise looking like the Seventh Circle of Hell, killed 85 people, destroyed nearly 19,000 structures, and torched 153,336 acres in Butte County.

Closer to home, we had the 2017-18 Thomas Fire and resulting mudslide in Ventura and Santa Barbara counties that killed 23, destroyed more than 1,000 structures, and burned a whopping 281,893 acres. Fire is a fact of life in California, and wildfires have become more frequent, more deadly, and more destructive. For California homeowners who can’t get coverage, their option of last resort is the state’s FAIR Plan Insurance, which only covers fire and no other kind of damage, and that costs up to $5,400 a year. Yikes! 

Nobody wants to pay more for insurance than they need to, but if insurance companies that had been providing coverage in California are now fleeing the state and leaving their customers high and fire-season-dry, perhaps they weren’t charging enough for premiums in the past. And that may be an entirely self-inflicted wound. In 1988, Californians passed Proposition 103 that required “prior approval” by California’s Department of Insurance before insurance companies could implement property insurance rates. The ballot also required insurers to “roll back” their rates by 20 percent.

You get what you pay for … and you don’t get what you don’t pay for. Now many California homeowners are holding a big bag of bail yourselves out, suckers. And it’s going to cost all of us a lot of money.

The Canary is always bailing someone’s foot out of their mouth. Send comments to [email protected].

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