Thousands of people in the Bay Area and many more throughout California are in limbo right now in terms of their insurance coverage.
A possible legislative deal to keep insurance companies from fleeing the state collapsed, and now many homeowners are worried they may not be able to find insurance for their homes.
California’s record number of catastrophic wildfires is the main reason many insurance companies say they can’t afford to stay. They said that they are spending too much to pay claims, while the state is limiting how much they can raise their premiums through regulations and voter-passed protections such as proposition 103.
San Jose homeowner Cindy Borges says coverage is expensive and it keeps going up.
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“We live in wildfire country, and we’ve had insurance over the last year,” she said. “We just received a bill and it’s doubled what it was last year.”
Borges adds that’s not including their actual, separate wildfire coverage.
“It’s, like over $5,000 a year and we’re not sure if they’ll continue to insure us in the future,” she said.
That’s what many people statewide face, according to the Consumer Watchdog group which has been fighting to get the state insurance commissioner to force companies to stay.
NBC Bay Area talked to Consumer Watchdog founder Harvey Rosenfield, the author of Prop. 103, who says the insurance industry is using wildfires as an excuse to raise rates or deny coverage. They are threatening to leave the state to hold officials and the public hostage.
“So, it’s creating shortages in the marketplace, and we think they’re colluding, in order to put pressure on the legislature and now, on Insurance Commissioner Ricardo Lara to de-regulate them. They’re looking for a bailout,” he said.
Lara said in a statement Wednesday that he is still negotiating with the insurance industry.
NBC Bay Area reached out to the industry group, the Personal Insurance Federation but did not hear back. Though, it has publicly blamed California’s “burdensome regulations.”
Rosenfield says there may be a temporary solution for consumers.
“There is an alternative to the private insurance companies and that is the “California Fair Plan.” That is a government-created entity,” he said.
If a legislative solution is going to be worked out, it will have to happen fast. Since the legislature is out of session starting Thursday night until next year.
