Mosquito Fire reprieve: Insurers can’t drop homeowners for a year, California regulator says

Thousands of Northern Californians living in the vicinity of the Mosquito Fire won’t have to worry about losing their homeowners’ insurance — for a year, anyway.

Diving into an issue that’s been plaguing rural California for the past few years, Insurance Commissioner Ricardo Lara issued a one-year ban Thursday that forbids carriers from dropping homeowners who live in the area where the Mosquito Fire has burned.

The order affects 49,639 homeowners, split evenly between Placer and El Dorado counties, plus about 225 homeowners in Nevada County. Lara issued a similar order for about 180,000 homeowners in Riverside County, site of the Fairview Fire.

A total of 40 zip codes are included in Lara’s order.

Homeowners coverage has become a serious problem for many rural Californians since 2017, when a wave of costly mega-fires chewed through the wine country north of San Francisco. After the devastation of 2018, capped by the destruction of Paradise in the Camp Fire, insurers were facing more than $20 billion in losses and began strategically retreating from areas considered at risk to wildfire.

Dropped by their carriers, tens of thousands of Californians have had to buy fire coverage from the California FAIR Plan, the so-called “insurer of last resort” created by the Legislature in the 1960s. The plan has no state subsidies, and by the time customers purchased additional coverage to handle burglary and other insurance risks, their total cost of insurance had tripled in many cases. Homeowners who’d been paying, say, $2,000 a year have been paying as much as $6,000.

There have been signs that the insurance crisis is easing, as some carriers have signaled their willingness to re-enter fire-prone areas, thanks to rate increases and better data about wildfire risks. Still, when big wildfires strike, companies will send homeowners in the area the dreaded non-renewal letters telling them their coverage will soon expire.

The insurance commissioner has the power to give vulnerable homeowners some stop-gap protection. Under SB 824, a law he wrote while he was a state senator, Lara is able to impose one-year moratoriums that prohibit insurers from dropping customers in areas hit with major wildfires.

“Wildfires are devastating even if you did not lose your home, so it is absolutely critical to give people breathing room after a disaster,” Lara said in a statement Thursday. “This is not the time to be having to search for insurance.”

The Mosquito Fire has burned 76,539 acres, and destroyed 78 homes and other buildings, since igniting Sept. 6 near Foresthill. Containment has jumped to 60%, thanks in part to rains earlier this week, and evacuation orders have been lifted.

This story was originally published September 22, 2022 at 11:02 AM with the headline "Mosquito Fire reprieve: Insurers can’t drop homeowners for a year, California regulator says."