Marcel Houtzager figured it would be easy to find a new insurance company when the old one declined to renew his policy for Black Mountain Ranch. “No problem,” he told himself. “We’ll just go shopping. There must be lots of carriers.”
Sally Gale thought the same thing. Surely someone would cover her Chileno Valley Ranch and its lovingly restored Victorian farmhouse.
Carrier after carrier turned them down.
With climate-fueled disasters increasing, California property owners are finding it harder and harder to find conventional insurance coverage—especially in areas such as Marin County, where much of the landscape is at high risk of wildfires. State Farm and Allstate recently placed a moratorium on new California policies, and Farmers Insurance has capped the number of new policies it will issue each month.
More and more property owners have been forced to turn to the insurer of last resort: the California FAIR Plan, a state-mandated insurance pool with barebones coverage and high rates. It is often paired with a supplemental policy from the conventional market that fills gaps in coverage.
“All we could get was the FAIR Plan, and it tripled our rates,” said Mr. Houtzager, whose property has a barn, a ranch house and outbuildings. His annual insurance cost jumped from $20,000 to $60,000.
When Cal Fire proposed an update to the state’s map of fire hazard zones last year, it placed 100,000 acres of Marin in the high hazard category, an increase of 33 percent since the previous map was drawn in 2007. Large swaths of West Marin moved from moderate risk to high risk, or from high risk to very high risk.
Areas at greatest risk include Inverness and Stinson Beach as well as ranchlands east of Tomales Bay, where Ms. Gale and her husband, Mike, grow fruit trees and graze sheep and beef cattle. Two years ago, Travelers Insurance sent them a letter saying it would not renew their policy. Their broker searched for other carriers but could find nothing but FAIR.
“No one would take us because we live in a high fire-danger area,” Ms. Gale said. Their rates nearly doubled even though the new policy covers only their house, not their barns or outbuildings, which were previously covered.
“The days of the $2,500-a-year homeowner’s policy have disappeared,” said B.G. Bates, a West Marin realtor with Golden Gate Sotheby’s.
Lee Schoenhof, an insurance broker and agent, says it is virtually impossible to get a homeowner’s plan in heavily wooded areas such as Inverness. He sends customers there straight to FAIR. “There are very few carriers, if any, that are writing policies right now,” Mr. Schoenhof said. “Most of them have instituted some form of moratorium. They’ve all been inundated. There are quite a few people who have been non-renewed and are searching for coverage.”
Companies are still absorbing the cost of claims made after California’s recent spate of record-setting wildfires. Reconstruction expenses are high due to supply shortages and inflation. To protect consumers, the state Department of Insurance caps insurers’ ability to raise rates, and some top sellers have decided the reward of selling policies doesn’t cover the increased costs.
Marin fire officials are brainstorming ways to make it easier for property owners to obtain insurance at more affordable rates. Mark Brown, director of the Marin Wildfire Prevention Authority, says he is engaged in ongoing conversations with insurance companies, urging them to reduce rates for property owners who take steps to reduce fire risk.
“We’re connecting with several different insurance companies and attempting to partner with them,” Mr. Brown said. “We’re urging them to consider the individual efforts of homeowners as well as community efforts and countywide efforts to create fire-adapted communities.”
Fire officials inspect West Marin homes every three years and advise homeowners on safety measures. The M.W.P.A. is also exploring the possibility of joining an insurance pool with communities that have been proactive about reducing wildfire risk, including Paradise, which was virtually leveled by the 2018 Camp fire in Butte County.
Paradise recently commissioned a study that found that insurance company losses from wildfire could be reduced by 75 percent if the town undertakes comprehensive wildfire mitigation efforts while rebuilding. Insurance rates could be cut by 55 percent, the study concluded.
Mark Northcross of NHA Advisors, the firm that commissioned the study for Paradise, has been sharing the results with insurance companies, who have said such a pool could only work if it included fire-adapted communities from around the state. Mr. Northcross has reached out to Marin and other communities to gauge interest.
“We got a lot of good feedback from the insurance industry, but they told us they can’t just do this for one community,” Mr. Northcross said. “If Paradise is the only community in California that does it, there’s too much concentrated geographic risk.”
Any property owner who has a mortgage is required by their bank to buy insurance. Those whose property is paid for can go without insurance and “self-insure,” incurring the risks themselves.
“A lot of people out there just aren’t insured,” said Melissa Daniels, who operates the Cow Track Ranch in Nicasio. “Some have decided that the cost of insurance is more than they can afford.”
Ms. Daniels said Travelers Insurance dropped coverage for her ranch not long after the 2017 fire in Santa Rosa. She now covers her home through FAIR. To insure her barns and outbuildings, she had to find supplementary coverage elsewhere. In all, she said, her family’s insurance costs nearly tripled. “What the insurance companies do is, they’ll give you about two weeks’ notice, right before your renewal, and then your agent has to shop for a new policy,” she said.
John and Kathleen Hyland got a little more notice than that when Allstate canceled coverage of their homes in Oakland and Stinson Beach in late May, leaving them little more than two months to find new coverage. They are selling the Oakland house and retiring in Stinson Beach, where they’ve had a second home for a decade.
Mr. Hyland is a volunteer firefighter in Stinson Beach. Their home has a sprinkler system, they have hoses stationed around the house, and they cleared trees and brush from within 100 feet of the home. Still, they could only get coverage through FAIR.
“I think the insurance companies are engaged in bad faith,” said Mr. Hyland, who knows several other people in town whose coverage has been canceled. “They may just be trying to do this to force the California Insurance Commissioner’s hand to let them jack up rates.”
Karen Seidman, who purchased a home in Inverness earlier this year, didn’t waste time shopping around. Her insurance broker told her to go straight to FAIR. “He told me it would be really hard to get insurance, so I didn’t try,” she said.
Zuni Picarelli was uninsured when the Lagunitas home she had lived in for 45 years was ravaged by fire in April. Her insurer had dropped her several years ago, she said, and she gave up on finding a new one. “They don’t insure in my zip code,” she said. “We’re in the middle of Lagunitas, with all these trees.”
With or without insurance, she’s hoping to rebuild and remain. “I can’t leave here,” she said. “I live in paradise.”