SACRAMENTO, Calif. — As insurance companies continue to drop out of California, many suburban homeowners in places like South Sacramento, Folsom and Rocklin have noticed they're getting their policies dropped, even though they don't live in a fire prone area.
Tammie and Brian Sommers say they found the perfect home in Folsom six years ago. They picked Kemper Independence Insurance Company without hesitation for their homeowners insurance.
Three months before their policy renewal, they received a letter from Kemper saying their policy would not be renewed once it expires. Kemper provided the Sommers with possible next steps, including an option for the California FAIR Plan.
"I went in a little bit of panic mode, you know? (It's) homeowners insurance and everybody should have it," said Brian.
In 2023, the California Department of Insurance said Kemper Insurance issued more than $1.5 million in refunds to California homeowners after the department found the company overcharged policyholders for wildfire risk. Later that summer, Kemper stopped offering home insurance in all states.
Over in the heart of South Sacramento, Gerardo Cabral and his husband are proud to call their place home. The couple chose AmGUARD Insurance Company for their homeowners insurance.
"We just felt it was nice. It was a good opportunity. The cost was right," said Cabral.
About 10 months before their policy renewal, Cabral received a letter from AmGUARD saying they are no longer writing policies in California. AmGUARD says policies were canceled in 2024 because they no longer rate any insured policies in California due to wildfire risk.
At least seven of the state's property insurers, including bigger companies like Allstate and State Farm, have either dropped out of California or are only offering limited coverage.
"It's a hard market and with non-renewals, with rates going up, it just means our team has to work harder to find homes for our customers, and find the best deal that we can for them at the time," said Tony Bozzuto.
Bozzuto has 20 years of professional experience as an insurance broker. He noticed changes during the COVID-19 pandemic.
"There was a huge supply and demand situation, an issue which caused problems on the insurance side because when they're adjusting claims, when they're having to rebuild homes, repair cars, fix up properties, that supply chain issue caused a lot of problems which resulted in inflation and drove the cost to adjust the claim up," said Bozzuto.
He also blames the California Department of Insurance for its model for how insurance companies predict losses, calling it out of date with the increase in wildfire damage in the state. Insurance companies have turned to drones and satellite imaging to measure risk, resulting in increased rates. Bozzuto says the likelihood of being dropped may be less if homeowners keep their homes up to date.
"That's one thing that companies are now looking at is what brand electrical panel do you have? Because if it's an old one and it's a certain brand, they don't want it," he said.
These families tell ABC10 they have found new policies with new insurance companies, but it comes with a higher cost. This leaves these families wondering how it will impact them and other families in the future.
ABC10 asked Kemper Insurance how many policies were canceled and if they plan on writing in California again. We were directed to an old press release, announcing the company's plan to stop offering home insurance. ABC10 also reached out to AmGUARD, but we never got a response.
