New Calif. Insurance policy accounts for wildfire mitigation

The California Department of Insurance enforces a new insurance pricing regulation in light of sprawling wildfire blazes every year

SACRAMENTO – As wildfires have become more significant throughout California in the past few years, even threatening homes in Three Rivers in 2020 and 2021, insurance companies are now amongst several agencies that are doing their part to have a hand in prevention and protection.

As of Oct. 17, California’s Insurance Commissioner Ricardo Lara announced he will enforce a new insurance pricing regulation recognizing and rewarding wildfire safety and mitigation efforts made by homeowners and businesses. This regulation is the first in the nation to require insurance companies to provide discounts to consumers who implement safety regulations surrounding wildfire preparedness. 

“Protecting Californians from deadly wildfires means everyone doing their part, including insurance companies by rewarding consumers for being safer from wildfires,” Lara Said . “The reality of climate change is driving my determination to help communities better prepare, help our firefighters save lives and help more Californians find insurance they can afford.”

This new regulation follows a framework called Safer from Wildfires created by the California Department of Insurance and state preparedness agencies. It is a “ground up approach” that  follows three layers of protection —structure, immediate surroundings and the community. This new law requires insurance companies to submit new rate filings incorporating wildfire safety standards. The insurance companies have 180 days to establish a process for releasing wildfire risk determinations to residents and businesses. 

These discounts are only available to residents in those at risk areas who are more likely to be in the way of wildfire. In Tulare County this hits home with residents in areas like Three Rivers. In the past several years Three Rivers has been issued evacuation notices in some form from wildfires that came a little too close to home. 

In 2020 portions of Three Rivers were threatened by the SQF Complex Fire which was the largest fire in Tulare County history burning a total of 174,000 acres. In 2021, evacuation warnings were prompted by the KNP Complex fire, which burned 88,307 acres of land mostly in the Sequoia and Kings Canyon national park. 

Some of those safety measures that must now be recognized are upgraded roofs and windows, defensible space, and community-wide programs such as Firewise USA and the Fire Risk Reduction Community designation.

“Home Hardening retrofits, along with defensible space significantly increase a home’s chance of surviving a wildfire,” Chief Daniel Berlant, CAL FIRE Deputy Director of Community Wildfire Preparedness & Mitigation said. “Using the latest fire science and recent wildfire data, these retrofits and landscaping requirements provide a strong path to structure survivability.”

According to Berlant, CAL FIRE is currently funding over $300 million in local wildfire prevention projects to prepare communities against wildfire. But he said it will take every resident doing their part to ensure California is fully protected

In addition to helping with preparedness, a benefit of this regulation is the transparency it brings between homeowners and insurance companies. Insurance companies will now be required to provide their consumers with their property’s “wildfire risk score,” as well as the right to appeal the given score. According to Michael Soller, deputy insurance commissioner, with the California Department of Insurance, this provides homeowners more incentive to be prepared. 

“It imposes a couple of requirements on insurance companies,” Soller said. “One that they rate properties accurately, that they apply these discounts for the properties that have been mitigated or hardened. And number two, that they provide this transparency to people.”

What this law does not do is determine the level of discount the insurance companies will give to residents. In 2019, insurance companies representing 7% of the residential market provided insurance discounts. That number has risen to 40% and with this law will only continue to rise to 100% of the residential and commercial market with this regulation becoming a law.

Start typing and press Enter to search