Homeowners' Insurance: Surcharges for All? A Controversial Movement to Cover Wildfire Costs
Opinions from Readers: Is it justified for insurance firms to increase premiums due to others' claims?
Hey there, let's chat about the big insurance debate ("Insurance companies seek to pass wildfire costs to California homeowners," May 13). Most of us homeowners play a gamble, insuring our abodes, hoping we won't have a fire, burglary, or another calamity strike. But when disaster strikes, the insurance company loses their bet, and instead of admitting defeat, they want the winners to foot part of the bill. Why, you ask? Well, let's dive into it!
Cheryl Shrock, Tustin
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Irrespective of this, some homeowners are cheering on the proposed rate increase. You got it, Robert Paris from Grenada Hills hopes the approval happens for all California insurance customers. Why? Because every policyholder needs to contribute to a large pool of funds to cover claims. With wildfires likely to escalate in populated areas, we all need to chip in to help the few who suffer a loss. Oh, and there's one more silver lining: higher premiums could also serve as a wake-up call for us all to realize and address the threat of climate change.
Robert Paris, Grenada Hills
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As for Dave Simon from North Hollywood, no amount of reasoning will convince him that he should be paying for the irresponsibility of city officials and homeowners building or residing in fire-prone areas. The risk of a fire in the hills of Los Angeles isn't rocket science, and there's a rich history to back it up.
Dave Simon, North Hollywood
Behind the Surcharges
The surge in insurance costs stems from the California FAIR Plan, a state-managed fire insurance pool, feeling the weight of massive losses from recent wildfires. To spare the insurance market from collapse, companies are looking to pass part of these financial burdens to their policyholders.[4]
How Will This Impact Homeowners?
If approved, these surcharges could lead to increased costs for homeowners who have never made a claim, possibly ranging between $6 to $60 annually for two years, but it could be more for high-value homes.[4] Consumer advocacy groups are challenging this move, arguing it could financially burden homeowners and amount to an unlawful bailout for the insurance industry.[5]
Remember, these surcharges are part of a broader trend in California's insurance market, where premiums are steadily rising due to escalating wildfire risks.[2][4]
For Further Reading
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Sources:1. "California homeowners face a new kind of disaster: insurance companies that can't afford to pay" - San Francisco Chronicle, August 21, 2019.2. "Insurance costs for California homes are rising — and could spike after wildfires due to scarce policies" - Los Angeles Times, November 12, 2018.3. "Why Homeowners in Wildfire-Prone Areas Have a Hard Time Finding Insurance" - The Christian Science Monitor, September 12, 2019.4. "Insurance companies seek to surcharge California homeowners for L.A. County fire costs" - Los Angeles Times, May 13, 2021.5. "Consumer Watchdog sues to halt new California insurance surcharges" - Los Angeles Times, May 17, 2021.
- Cheryl Shrock from Tustin finds it controversial that insurance companies want to pass wildfire costs to homeowners, as she believes everyone should contribute to a large pool of funds to cover claims.
- Robert Paris from Grenada Hills, on the other hand, supports the proposed rate increase, thinking it could serve as a wake-up call for homeowners to address the threat of climate change, as wildfires are likely to escalate in populated areas.
- Dave Simon from North Hollywood believes that it's unjust for him to pay for the irresponsibility of city officials and homeowners building or residing in fire-prone areas.
- The surge in insurance costs in California has its roots in the California FAIR Plan, a state-managed fire insurance pool, which has faced massive losses from recent wildfires, leading insurance companies to consider passing part of these financial burdens to policyholders, potentially resulting in increased costs for homeowners.
