California to require insurance discounts for property owners who reduce wildfire risk
A bill to require insurance companies in California to pay homeowners’ premiums at much the same rate as wildfire-affected properties would be bad news for many homeowners.
The bill would penalize California homeowners by forcing insurers to offer equivalent fire insurance to those without insurance. The bill, which was introduced by Republican insurance industry representatives, would require that “standard” fire insurance reduce homeowners’ rates by roughly 50 percent, with a 15 percent discount for many homes built in areas that have never had a major wildfire.
For example, a single family home built in an area that has never had a major wildfire could reduce its fire insurance by 50 percent, and could have 15 percent of that reduction refunded as a homeowner discount. The bill would make homeowners’ policyholders with insurance who chose to purchase a homeowner’s policy with such a discount ineligible for government assistance.
The bill, AB 1018, says that if a homeowner is eligible for a 15 percent discount, insurers must match that reduction in their rates. But if the homeowner is not eligible for a discount, insurers would be free to charge their policyholders as much as they would if they were uninsured.
Because the bill contains no provisions for allowing homeowners without insurance to obtain a reduced rate, it would essentially cut the state-subsidized fire insurance programs for homeowners and renters in half, and potentially threaten thousands of homes with government help.
The bill has support from both Republicans and Democrats, with a large number of fire experts speaking in support of the bill but cautioning that it may not pass.
The insurance industry opposes the bill because it believes it would drive up costs and take away business from more profitable markets such as the individual market.
But the bill could have a significant impact on homeowners, who account for 20 percent of California’s population. According to the Los Angeles Times, as many as one-third of California homeowners with fire insurance would qualify for a discount if the bill passed.
The bill was introduced in the state Senate on Wednesday