SACRAMENTO, Calif. — Nevada City, Grass Valley and Truckee are among the highest wildfire exposure concentration areas in the state, according to newly released data from the California FAIR Plan.
The FAIR Plan is considered the ‘insurer of last resort’ for homeowners who can’t get fire coverage for their home anywhere else.
It is increasingly becoming many people’s only option, as most of the major companies in California’s homeowners insurance market have paused or restricted new business in the past couple of years, driving people to the FAIR Plan. This includes an announcement Wednesday by State Farm it will non-renew approximately 30,000 homeowners, rental dwelling and other property insurance policies starting July 3. State Farm also plans on withdrawing from offering commercial apartment policies in California, with the non-renewal of all of its approximately 42,000 policies starting Aug. 20.
The FAIR Plan announced Friday the launch of a new “Key Statistics and Data” page on its website to make important trends and information more publicly accessible. The information is current as of Dec. 2023 and will be updated quarterly.
“The FAIR Plan has experienced historic growth, and more Californians are continuing to turn to it for the coverage they need,” said the news release. “From September 2019 to December 2023, the FAIR Plan’s total exposure nearly tripled, from $112.75 billion to $311.64 billion. In the same period, Total Policies in Force increased 113%, from 154,494 to 339,044.”
An infographic on the page shows the FAIR Plan’s highest wildfire exposure concentration areas in the state. Nevada City, Grass Valley, Truckee, Sonora and Twain Harte are Northern California’s top five areas. For Southern California, they are Big Bear Lake, Big Bear City, Lake Arrowhead, Crestline and Running Springs.
The ballooning number of people turning to the FAIR Plan has created its own set of problems, compounded by the FAIR Plan’s switch to a new computer system late last year, which has created myriad technical issues for insurance agents and policyholders, as ABC10 reported last month.
“Increasing risks due to climate-driven wildfires and a lack of adequate insurance rates have resulted in fewer coverage options available to consumers in the voluntary market,” the new webpage says. “As more insurers have declined to provide new coverage or renew existing policies, more Californians have turned to the FAIR Plan for the basic property coverage they need.”
Homeowners forced to go on the FAIR Plan because no other company will offer them insurance and they have a mortgage – which requires having fire coverage – also face purchasing what’s called a Difference-in-Conditions policy, formerly known as ‘wraparound coverage.’ This additional policy provides other coverage not offered in the bare-bones FAIR Plan. People in that situation can often find themselves paying thousands of dollars more per year for homeowners insurance. For lower- or fixed-income homeowners, that increase can be extremely difficult if not impossible to absorb.
Back in November, Aurora Mullett – managing partner of Sky Insurance Group, an independent insurance broker based in Rocklin – told ABC10 she’d just helped a senior who “was basically telling me that if I couldn't find her something lower [cost], she had to choose between her insurance and eating, and she couldn't go back to not eating, so she would have to just chance it.”
The woman had a small mortgage left on her home, Mullett said, “but she is willing to let the mortgage do what's called a force-placed coverage to just pay off her loan, and then she still has the land if something bad happens.”
The California Department of Insurance is in the midst of the biggest overhaul of the homeowners insurance market in three decades. Insurance Commissioner Ricardo Lara announced the reforms in Sept. and his given himself a deadline of Dec. 2024 to implement them. ABC10 reported just last week about one of the steps in the ongoing process: a newly proposed rule that could lead to more accurate pricing for homeowners insurance policies.
WATCH MORE ON ABC10: Homeowners complain of insurance issues with CA FAIR Plan
