It’s the equivalent of forcing auto insurance companies not to drop a driver with a DUI record.
California state regulators are barring insurance companies from fleeing fire-prone areas. On Thursday, the California Insurance Department issued a mandatory one-year ban on companies refusing to renew policies for homeowners living in or nearby areas affected by wildfires.
Companies have been dropping residents’ policies as the damages have become costly with more than $24 billion paid out in the last two years. As a result, victims of the fires have said they have seen their premiums double or triple, and many have struggled to find insurance after being dropped.
That’s what insurance is all about. The higher the risk, the costlier the insurance.
Insurance Commissioner Ricardo Lara said the moratorium will help at least 800,000 families, and will allow time for a more permanent solution.
“What we’ve done is now been able to track and verify that this is a real problem in these communities,” he stated. “Not only does it affect the individual homeowner, but its affecting the local economy because if you can’t find insurance for your property then you can’t sell that property — that affects the assessment of your property and that affects the local tax base.”