NEVADA COUNTY, Calif. — Nestled in the Tahoe National Forest is the Nevada County gold rush-era town of Washington.
“I love the community, I love the river, I love the history,” said Charity Jackson.
Jackson's lived in Washington for 25 years. In 2017, she and her husband bought the historic Washington Hotel, perched above the South Yuba River.
“I don't make a killing; I make a living, and that's okay because I get to work here every day,” Jackson said sitting on the back deck. “Like, this is my job and this is my view.”
But her view is getting harder to afford.
Jackson’s commercial insurer dropped her in late 2019. She says her only remaining option was the California FAIR Plan, the state-mandated, high-cost, bare-bones insurer of last resort, which has become hundreds of thousands of Californians’ only resort.
In the last three years, most of California’s biggest homeowners insurance companies have paused or limited business in the state. They cite the rising risk of wildfires, the high cost of rebuilding homes and state regulations hurting their business.
The result is increasingly unaffordable and unavailable homeowners insurance policies in the regular market, forcing people onto the state-created, privately-run FAIR Plan.
In Sept. 2019, the FAIR Plan had nearly 154,500 dwelling- and about 4,600 commercial policies in force. Less than five years later, those numbers have ballooned to 408,432 and 11,026, respectively.
In 2020, when Jackson switched to the FAIR Plan, her annual premium cost $10,879, more than double what her last insurer charged for commercial property insurance.
“I just call it California unFAIR,” she said.
Then, in 2023, “the total for the renewal was about $33,500, and so I thought it was a mistake when I opened it, and I just cried.”
That’s $33,491 just to insure the hotel for one year against fire damage, with a $1.5 million limit, not including extended coverages like water damage or liability, which she has to purchase separately.
She filed a complaint with the Department of Insurance, which upheld the FAIR Plan’s assessment. In order to pay that 2023 premium, Jackson and her friends held two fundraisers and started a GoFundMe campaign.
Then, in 2024, her FAIR Plan premium rose to $62,558, half of which was a “brush surcharge” for nearby dense forest outside her property line — and outside her control.
“I would maybe hire a person to just be my personal fire person for $62,000 a year or pay my mortgage off if I had that kind of money annually, but I don’t,” Jackson said.
So she opted to go without fire insurance for her business.
“Defaulted to mortgage insurance, which is about $7,000 a year,” Jackson said. “And that's great, because I get to keep my business, but also it's a huge risk, right? Because now I'm completely not covered for any kind of fire that happens.”
She held another fundraiser this summer— only this time it was to buy a sprinkler system and pump to pull water from the river during a wildfire.
Mike Stewart, a veteran firefighter with 35 years of professional experience, is the chief of Washington’s eight-person volunteer fire department.
“I get routine calls from homeowners, ‘Hey, I just got canceled. What do I do?’” he said.
ABC10 asked what he thinks an insurance company sees when it looks at a community like Washington.
“They see high liability,” Stewart said.
Asked whether he thinks that’s fair, he replied, “Well, yes and no. You know, you got to look at what is. They're in business for a reason… when they look at the fact that we're in a high-severity fire area, they're looking at that as a high risk and it realistically is.”
As fewer coverage options are available in the voluntary insurance market, the California FAIR Plan is writing more policies across the state, especially in high-fire areas like Lake Arrowhead and Big Bear. In Nevada County, the FAIR Plan lists Grass Valley, Nevada City and Truckee as three of the top high-exposure areas.
The roots of the current crisis lie in 1988, when 51% of voters passed Proposition 103, to overhaul California’s insurance regulations. That was as car insurance premiums were rapidly rising due to inflation.
Prop 103 made the position of the California Insurance Commissioner an elected one. It requires insurance companies to get permission from the state before raising rates. Insurers must provide data justifying their rate hike, which the Department of Insurance reviews over the course of several months.
Insurance companies sued to block Prop 103.
“With the passage of 103, we have to throw up our hands. It’s impossible to make a viable business out of it,” said then-Fireman’s Fund Chairman John Byrne.
Political activist, four-time presidential candidate and consumer advocate Ralph Nader championed 103, saying it safeguards consumers from unchecked rate hikes by insurance companies.
“There’s no blocking the will of the people,” Nader said. “[Insurance companies] may delay, they may harass, they may snip away at Proposition 103, but its essential ingredients are going to be upheld.”
Prop 103 survived its legal challenges and continues to govern insurers doing business in the state.
“However Prop 103 was well-intentioned, the long-term effects have been traumatic and - in some cases - extremely detrimental to the consumers that it was designed to protect,” said insurance expert Karl Susman, of Susman Insurance Agency.
Today, insurance experts say, companies are leaving California - in part - because the rate approval process takes too long — sometimes more than a year — with too much red tape. Subsequently, insurers’ rates can't keep pace with the rising cost of doing business, leading to fewer options and higher prices for consumers.
The Willo Steakhouse, a historic roadside saloon and restaurant, flanks Highway 49 just west of Nevada City, taking on various shapes and names for more than 75 years.
“We've been voted best steak the last 25 years in a row by the readers of the Union newspaper,” said co-owner Mike Byrne.
He and Nancy Wilson bought the Willo more than 20 years ago. They’re now in the process of selling it, but the new owners will need a new insurance policy.
“That's the only hold-back right now,” Wilson said.
“Obtaining insurance for a new owner,” Byrne added.
The pair insures the Willo through Farmers Insurance.
“Two years ago, we were paying $9,000 a year. Then last year, $21,000. This year, $37,000,” Wilson said. “Do you know how many dinners you have to sell to make $37,000? It's a lot more than people think.”
Byrne said their insurer told him “they would not honor that policy with a new owner, so new owner would be having to go elsewhere, and there are few – if any – options. They could do California FAIR Plan, but… it's going to be well in excess of probably $37,000.”
“And the coverage will not be near as good,” Wilson added.
The two are at least grateful they haven’t had to go to the FAIR Plan.
“I'm told that I'm very fortunate, should be happy to write a $37,000 check,” Byrne said with a hearty laugh. “Insurance here in state of California is dysfunctional.”
ABC10 asked them what they’d say to decisionmakers in Sacramento.
“Hey, let's get this done. We're suffering out here,” Byrne said. “Help us, please!”
“Thousands and thousands of people are being affected by this,” Wilson said.
Insurance Commissioner Ricardo Lara has proposed major changes to California’s insurance regulations, which he promises will be in effect by the end of 2024.
Insurance experts are hopeful.
“I think – realistically - we should expect to see companies begin to re-enter the market, getting their toes a little bit wet, maybe in the first quarter,” Susman said.
Jackson remains skeptical.
“The consumers - yet again - are really reaping the consequences of failures of entities and organizations that were meant to be the gatekeepers of this whole situation,” she said. “PG&E could have done better. The insurance companies could have done better. Our commissioner, as well as other government agencies, could have done better… It seems like we've been very reactive to it, instead of being proactive.”
