Mitigating Wildfire Risks, Yet Insurance Remains Elusive for Californians

Lisa Mailhot  |  May 2, 2024


Mitigating Wildfire Risks, Yet Insurance Remains Elusive for Californians


As the Golden State  grapples with the ever-present threat of wildfires, homeowners are taking proactive steps to safeguard their properties. From clearing vegetation to installing fire-resistant roofing, Californians are embracing mitigation measures to reduce the risk of devastating losses. However, an insurance crisis looms large despite these efforts and the state's substantial investment of $3.7 billion in forest management in the past seven years.

Insurance companies, citing growing risks and costs, have paused or stopped writing new policies in California, causing a home insurance affordability and availability crisis, making homeowners grapple with soaring premiums or the prospect of being priced out entirely. In contrast, others have been forced to turn to the ever-growing FAIR Plan, the insurer of last resort that offers less coverage but higher insurance premiums anyway.

In response to this crisis, three state lawmakers are spearheading efforts to ensure that insurers duly recognize mitigation efforts when setting premiums or determining policy eligibility. Senator Josh Becker's Senate Bill 1060 seeks to incorporate mitigation into insurers' underwriting decisions – when they consider whether to write or renew policies. 

Assembly member Freddie Rodriguez's Assembly Bill 2983 calls for the Insurance Department and the California Office of Emergency Services to work together to determine whether mitigation investments are helping insurance availability.

The crux lies in the disconnect between the substantial investments made by homeowners, communities, and the state itself and the lack of corresponding relief in insurance costs or availability. While studies show that mitigation can reduce wildfire risk by up to 75%, insurance industry experts express concerns about shifting financial risks to insurers, asserting that mitigation is already factored into their models.

However, stakeholders across the board – fire chiefs, insurance agents, and homeowners – argue that mitigation efforts are not adequately recognized or incentivized. Residents spend tens of thousands of dollars hardening their homes, while counties invest millions in creating elusive fire breaks, discounts, or policy renewals.

Assemblymember Damon Connolly's Assembly Bill 2416 would require the Insurance Department to periodically evaluate and update its Safer from Wildfires regulation, ensuring that mitigation measures remain relevant and effective in protecting homeowners and communities.


On the federal front, Representatives Mike Thompson and Doug LaMalfa have introduced legislation (HR 7849) to provide grants of up to $10,000 and tax credits to incentivize mitigation efforts for individual homeowners and businesses.

The Insurance Mitigation Dilemma underscores the complex interplay between risk mitigation, insurance affordability, and community resilience. As Californians continue to invest in safeguarding their homes and neighborhoods, the call for recognition and relief from insurers grows louder, highlighting the urgent need for a comprehensive solution.

Bottom Line

 If you're considering a move within Orange County, let's connect. I'm here to guide you through the intricate real estate landscape, ensuring a seamless transition while navigating the evolving insurance landscape.



Reference: “As Californians mitigate wildfire threats, why is there still an insurance crisis?” by and Levi Sumagaysay. Published on May 01, 2024.

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